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CONTENTS

PART I: OVERVIEW AND HISTORY

INTRODUCTION

WHO IS MIDDLE CLASS IN NEW YORK?

A HISTORICAL OVERVIEW

PART II: MIDDLE CLASS CHALLENGES

WHY THEY CAN’T MAKE IT HERE: New York’s exorbitant cost

of living is making the city out of reach

CHILD CARE COSTS: Many working parents spend thousands

on child care—if they can find a slot

THROUGH THE ROOF: Over the past decade, housing costs

skyrocketed in virtually every corner of the city

NO TICKET TO RIDE: There has been a steady erosion of

middle income jobs in New York

NOT MAKING THE GRADE: Inferior public schools cause

middle class families to leave New York

A PAROCHIAL VIEW: Catholic schools once offered a quality

alternative to substandard public schools. Now, it’s not so clear.

STUCK ON THE TRAIN: Transit service has not kept pace

with growing demand in neighborhoods outside of Manhattan

THERE GOES THE NEIGHBORHOOD: Out-of-scale

development has diminished the quality of life in many

communities

PART III: SNAPSHOTS OF THE MIDDLE CLASS SQUEEZE

SCHOOL’S OUT: University professors are opting to leave

schools in New York for locations where their salaries go farther

CITY LIMITS: Municipal jobs used to provide a clear path to

upward mobility, but that may no longer be the case

DETOUR FROM THE DREAM: Successful immigrants are

leaving New York for other, more affordable regions

PART IV: REVIVING THE MIDDLE CLASS DREAM IN NEW YORK

A PLATFORM FOR MOBILITY: Community colleges should

play a more central role in boosting New Yorkers into the

middle class

A NEW ECONOMY FOR NEW YORK: City officials must do

more to groom industries that create middle income jobs

IF YOU BUILD IT: Most of the new housing built in the past

decade was geared toward the luxury market or the poor

BOLSTERING THE BOROUGHS: The outer boroughs

represent the best hope of retaining the middle class

BACK TO THE BASICS: Instead of building stadiums, city

officials should focus on improving everyday life in NYC

RECOMMENDATIONS

This report was written by Jonathan Bowles, Joel Kotkin
and David Giles. It was edited by David Jason Fischer
and  Tara  Colton,  and  designed  by  Damian  Voerg.
Mark Schill, an associate with Praxis Strategy Group,
provided  demographic  and  economic  data  analysis
for  this  project.  Additional  research  by  Zina  Klapper
of www.newgeography.com as well as Roy Abir, Ben
Blackwood,  Nancy  Campbell,  Pam  Corbett,  Anne
Gleason, Katherine Hand, Kyle Hatzes, May Hui, Far-
ah Rahaman, Qianqi Shen, Linda Torricelli and Miguel
Yanez-Barnuevo.

This  report  was  made  possible  by  support  from  The
Bodman Foundation and Wagner College, New York
City. The Center for an Urban Future is a project of City
Futures, Inc. General operating support for City Futures
has  been  provided  by  Bernard  F.  and  Alva  B.  Gim-
bel  Foundation,  The  Citi  Foundation,  Deutsche  Bank,
The F.B. Heron Foundation, Fund for the City of New
York,  Salesforce  Foundation,  The  Scherman  Founda-
tion,  Inc.,  and  Unitarian  Universalist  Veatch  Program
at Shelter Rock.

City Futures Board of Directors: Andrew Reicher (Chair),
Margaret Anadu, Michael Connor, Russell Dubner, Ken
Emerson, David Lebenstein, Gail O. Mellow, Gifford
Miller, Lisette Nieves, Ira Rubenstein, John Siegal, Ste-
phen Sigmund, Karen Trella, Peter Williams and Mark
Winston Griffith.

Cover photo: Adrian Kinloch

PART I

For much of its history, New York City has thrived as a place that both sus-
tained a large middle class and elevated countless people from poorer back-
grounds into the ranks of the middle class. The city was never cheap and
parts of Manhattan always remained out of reach, but working people of
modest means—from forklift operators and bus drivers to paralegals and
museum guides—could enjoy realistic hopes of home ownership and a mea-
sure of economic security as they raised their families across the other four
boroughs. At the same time, New York long has been the city for strivers—
not just the kind associated with the highest echelons of Wall Street, but
new immigrants, individuals with little education but big dreams, and aspir-
ing professionals in fields from journalism and law to art and advertising.

In recent years, however, major changes have greatly diminished the city’s

ability to both retain and create a sizable middle class. Even as the inflow of
new arrivals to New York has surged to levels not seen since the 1920s, the cost
of living has spiraled beyond the reach of many middle class individuals and,
particularly, families. Increasingly, only those at the upper end of the middle
class, who are affluent enough to afford not only the sharply higher housing
prices in every corner of the city but also the steep costs of child care and private
schools, can afford to stay—and even among this group, many feel stretched to
the limits of their resources. Equally disturbing, even in good times, the city’s
economy seems less and less capable of producing jobs that pay enough to
support a middle class lifestyle in New York’s high-cost environment.

The current economic crisis, which has arrested and even somewhat

reversed the skyrocketing price of housing, might offer short-term oppor-
tunities to some in the market for homes. But the mortgage meltdown and
its aftermath will not change the underlying dynamic: over the past three
decades, a wide gap has opened between the means of most New Yorkers
and the costs of living in the city. We have seen this dynamic play out even
during the last 15 years, as the local economy thrived and crime rates plum-
meted. Despite these advances, large numbers of middle class New Yorkers
have been leaving the city for other locales, while many more of those who
have stayed seem permanently stuck among the ranks of the working poor,
with little apparent hope of upward mobility.

This is a serious challenge for New York in both good times and bad.

A recent survey found the city to be the worst urban area in the nation
for the average citizen to build wealth.

For the first time in its storied

history, the Big Apple is in jeopardy of permanently losing its status as
the great American city of aspiration.

REVIVING THE CITY

OF ASPIRATION

10,000

5,000

-5,000

-10,000

-15,000

-20,000

-25,000

-30,000

-35,000

MIDDLE CLASS ON THE MOVE?

New York still does well in attracting highly educated people, but growing numbers

of those with a bachelor’s degree are leaving the five boroughs

Bronx

Brooklyn

Manhattan

Queens

Staten Island

NYC

-5,141

-5,984

-12,933

5,997

-4,442

-8,195

-5,304

-744

-1,550

-12,955

-29,370

2004–2005

2005–2006

Source: Praxis Strategy Group, U.S. Census, 2005 and 2006 American Community Survey Public Use Microdata

-4,029

f p

’s

This report takes an in-depth look at the chal-

lenges  facing  New  York  City’s  middle  class.  More
than a year in the works, the report draws upon an
extensive  economic  and  demographic  analysis,  a
historical  review,  focus  groups  conducted  in  every
borough and over 100 individual interviews with ac-
ademics, economists and a wide range of individuals
on  the  ground  in  the  five  boroughs.  These  include
homeowners,  labor  leaders,  small  business  own-
ers,  real  estate  brokers  and  developers,  immigrant
advocates, and officials from two dozen community
boards.

Throughout the course of our research, the vast

majority of New Yorkers—for the most part fierce de-
fenders of the city—were alarmingly pessimistic about
the current and future prospects of the local middle
class. “What middle class?” was the quip we heard
repeatedly after telling people about our study.

But for all the valid concerns of those we spoke with,

our conclusion is that a strong middle class remains in
New York, and that there are considerable grounds for
optimism about its future. In 2007, the city recorded the
second  highest  total  of  building  permits  issued  since
it  started  keeping  track  in  1965,  with  Brooklyn  and
Queens  hitting  records—a  clear  sign  that  large  num-
bers of people want to live in these long-time middle
class havens. Home ownership rates in the city reached
their highest levels ever in 2007, another testament to
the city’s desirability—even if a not insignificant share

of the recent housing purchases were driven by unfair
and deceptive predatory lending practices. And in many
communities, there have been long waiting lists for day
care centers and private schools. While the economic
crisis is already leading to sharp spikes in foreclosures,
a precipitous decline in housing sales and, most trou-
bling, a massive number of layoffs, it should not reverse
the sense of many middle class families that New York
now offers a safe environment to raise their kids—a key
factor in the decision to stay in the city rather than de-
camp for the suburbs.

“The perception of New York among young peo-

ple is so phenomenal,” says Alan Bell, a partner with
the Hudson Companies, a housing development com-
pany. “It used to be that automatically you’d get mar-
ried and had kids and you were out to Montclair, New
Jersey or Westchester. Now they want to stay. The
question is how they stay since it’s so expensive.”

Set against this picture of progress, however, are

some alarming trends. Most of the people interviewed
for this report told us of middle class friends, rela-
tives or colleagues who had recently given up on the
city. “I work with a lot of people who moved to Phila-
delphia and commute each day,” says Chris Daly, a
media director at Macy’s who now lives with his wife
and three kids in Tottenville, Staten Island but plans
to move to New Jersey. “It’s the cost of living. You’re
going to see more people moving to Philadelphia, the
Poconos and commuting.”

3,500

3,000

2,500

2,000

1,500

1,000

500

MIDDLE CLASS ON THE MOVE?

Twice as many New Yorkers relocated to Philadelphia and Charlotte in 2006 as in 2000;

the number moving to Gwinnett County, GA and Lehigh County, PA roughly tripled

Source: Praxis Strategy Group, Internal Revenue Service Migration Data.

r o

f N

1999–2000

2000–2001

2001–2002

2002–2003

2003–2004

2004–2005

2005–2006

Indeed, twice as many New York City residents

relocated to Philadelphia in 2006 than in 2000 (3,635
compared to 1,811). During the same period, the
number of city residents moving to Charlotte, NC also
doubled, from 904 to 1,893, while the number relocat-
ing to Lehigh County, PA—home to Allentown—more
than tripled (from 648 to 2,101) and the number leav-
ing for Gwinnett County, GA—a suburb of Atlanta—
nearly tripled (from 762 to 2,121).

Astonishingly, more residents left the five bor-

oughs for other locales in each of the years between
2002 and 2006 than in 1993, when the city was in far
worse shape. In 2006, the city had a net loss of 151,441
residents through domestic out-migration, compared
to a decline of 141,047 in 1993.

Overall, in 2006 the

city had a higher net domestic out-migration rate per
1,000 residents (-18.7) than struggling upstate com-
munities such as Ithaca (-8.0), Buffalo/Niagara Falls
(-7.6), Rochester (-5.8) and Syracuse (-5.1).

Fewer New Yorkers left the city in 2007 than in

2006, perhaps because the slowing national economy
offered dimmer prospects of finding employment
elsewhere. But the extraordinarily high levels of
those relocating through much of the decade—even
as crime rates remained at record lows and the city’s
economy was booming—suggests that growing num-
bers of New Yorkers simply couldn’t prosper here.

As we document in this report, the city has been

losing, or is at risk of losing, many key constituencies:

Individuals with bachelor’s degrees. Even before the
economic  boom  ended,  every  borough  was  losing
educated professionals. In 2005, New York City had
a net out-migration of 12,955 individuals with bach-
elor’s degrees; a year later, the number had spiked
to 29,370—an increase of 127 percent. Brooklyn had
the  largest  out-migration  that  year,  losing  12,933
compared to 5,984 in 2005. “It is significant,” says
Mark  Schill,  a  demographer  with  Praxis  Strategy
Group. “A place that should be a mecca for people
that are highly educated is still losing them.”
Families.  While  much  has  been  made  of  Man-
hattan’s so-called “baby boomlet”—the borough’s
number of toddlers under the age of four grew 26
percent between 2000 and 2004—our data shows
that  many  of  these  new  families  don’t  stay  into
their kids’ school-attending years: the percentage
of children in Manhattan over age five drops well
below  the  national  average.  Meanwhile,  house-
holds with kids were most likely to leave the city;
nearly  40  percent  of  those  leaving  had  young
children at home.
Immigrants. Growing numbers of immigrants who
have attained a degree of success in New York—
including many business owners—are leaving the
five boroughs for other cities, particularly in the
Southeast, where housing is cheaper and immi-
grant communities are growing. For instance, our
research suggests that growing numbers of His-

•

Mecklenberg Co., NC

Gwinnett Co., GA
Philadelphia Co., PA

Lehigh Co., PA

-20,000

-40,000

-60,000

-80,000

-100,000

-120,000

-140,000

-160,000

MIDDLE CLASS ON THE MOVE?

More New Yorkers left the city in each of the years between 2002 and 2006

than in 1993 and 1994, a time when the city was in far worse shape

Source: Praxis Strategy Group, U.S. Census, 2005 and 2006 American Community Survey Public Use Microdata

1994

1998

2002

2006

-137,372

-124,099

-150,220

-151,441

panics are moving to the Charlotte, NC area, and
to communities in Georgia and Florida.
Municipal workers. A job in city government was
once a ticket to the middle class, but many mu-
nicipal  employees  today  have  all  but  given  up
on living in the city. One indication of this is the
ongoing campaign by the city’s largest municipal
union, DC 37, to win the right for its members to
live outside the five boroughs.
The  black  middle  class  in  Eastern  Queens.  The
borough  of  Archie  Bunker  has  nurtured  one  of
the  nation’s  largest  black  middle  class  commu-
nities  throughout  a  handful  of  adjacent  Eastern
Queens  neighborhoods.  But  community  leaders
worry that the precipitous rise in real estate pric-
es  during  the  past  decade,  combined  with  stag-
nant wages, will make it difficult for the current
generation of black New Yorkers to afford home
ownership in these areas. As it is, the number of
black  residents  in  Manhattan  and  Brooklyn  re-
cently declined for the first time since the 1800s.

In addition to middle class flight, the city is in-

creasingly bifurcated, with the path from poverty to
the middle class more arduous than ever. During the
years of economic growth from 2003 to 2007, average
weekly wages, when adjusted for inflation, barely in-
creased in the boroughs outside of Manhattan—rising
by just 0.4 percent on Staten Island, 0.6 percent in

•

Brooklyn, 1.4 percent in Queens and 2.5 percent in
the Bronx. In Manhattan, the increase was 21.8 per-
cent. The historical trends are just as bleak: Between
1975 and 2007, while average real weekly wages near-
ly doubled (increasing by 96 percent) in Manhattan,
they went up by 1.1 percent in Queens, 1.7 percent in
Brooklyn, 2.5 percent in Staten Island and 8.6 percent
in the Bronx.

As the gap between earning power and expenses

in New York widened even while the economy added
jobs, the number of working poor has jumped. In 2005,
46 percent of New Yorkers living below the poverty line
held regular jobs, versus only 29 percent in 1990. Per-
haps this isn’t surprising given that 31 percent of work-
ers over the age of 18 in the five boroughs are employed
in low-wage jobs; the share is even higher in the Bronx
(42 percent) and Queens (34 percent).

Not surprisingly, we conclude that the city’s sky-

high  cost  of  living  is  the  single  most  important  rea-
son  that  so  many  middle  class  New  Yorkers  find  life
here  untenable.  But  cost  is  not  the  only  issue:  as  we
detail,  a  number  of  other  deep-seated  problems  put
the squeeze on middle class New Yorkers. These in-
clude a local economy that now struggles to create jobs
that pay middle-income wages and offer clear paths to
advancement;  a  public  education  system  that  count-
less middle class families still consider inferior; a mass
transit system that, even before the recent MTA bud-
get crunch and the resultant decision to increase fares

and cut service, failed to keep pacing with the growing
demand—particularly in middle class neighborhoods
outside of Manhattan; and a rash of unsightly and un-
planned development that has diminished the quality
of life in several of the city’s low-scale neighborhoods.

The story begins, however, with cost concerns. The

basic cost of living in the five boroughs has risen much
more rapidly than the incomes earned by most mid-
dle-income New Yorkers. The ACCRA Cost of Living
Index, an analysis by the Council for Community and
Economic Research, finds that Manhattan is by far the
most expensive urban area in the United States, with an
aggregate cost of living (224.2) more than twice the na-
tional average (100) and considerably higher than the
second most expensive city (San Francisco, at 173.6).

But the other boroughs don’t necessarily provide much
relief: Queens had a higher cost of living (156.2) in the
third quarter of 2008 than all but four of the 315 major
urban areas measured. Only Manhattan, San Francisco,
Honolulu (163.6) and San Jose (157.4) were more ex-
pensive.

Brooklyn likely is as or more expensive than

Queens, with the Bronx and Staten Island more afford-
able but still well above the national norm.

Not surprisingly, housing costs constitute a sig-

nificant part of the cost burden. In the third quarter of
2008, only 10.6 percent of all housing in the New York
City region was affordable to people earning the me-
dian income for the area—the lowest share of any ma-
jor metro area in the United States. According to Reis,
Inc., a New York City-based real estate research com-
pany, the city’s “average effective rent”—a measure
which factors free rent incentives and other landlord
concessions into the price of rent—during the fourth
quarter of 2008 was $2,801, 53 percent higher than the
second place city (San Francisco, $1,827) and almost
three times the national average ($995).

Housing is not the only problem, however. City

residents pay among the highest prices in the nation
for electricity. Telephone service, auto insurance,
home heating oil, parking and milk are also higher in
New York than virtually anywhere in the continental
U.S. The combined state and local tax bill is also tops
among major cities. And in recent years all of these
costs rose much faster than salaries for the average
middle class worker: Between 2002 and 2007, the cost
of home heating oil in the city shot up by 125 percent,
the average property tax bill increased by 67 percent,
milk prices rose by 60 percent, electricity bills were

up by 27 percent and telephone service cost 16 per-
cent more. Of course, home prices (77 percent) and
apartment rents (16 percent) increased as well.

A significant share of middle class New York

families also end up paying tens of thousands of dol-
lars a year in additional expenses that their counter-
parts elsewhere can minimize or avoid. For instance,
since most middle class families in New York today
require the incomes of two working parents just to get
by, child care becomes a necessity for those without
grandparents or other relatives to look after young
children. These costs typically run from $13,000 to
$25,000 per child, per year—and families often need
to keep their kids in day care until at least age four,
when they can enroll them in schools.

Second, and perhaps equally significant, New York

City’s job mix has shifted away from positions that pro-
vide  middle-income  wages  and  benefits.  Indeed,  both
the city and the New York metropolitan region have lost
a far greater share of jobs in blue collar sectors like man-
ufacturing and wholesale trade than most other major
cities. In 2007, the manufacturing sector accounted for
just 3.2 percent of all private sector jobs in New York
City,  versus  12.7  percent  in  Los  Angeles,  11.3  percent
in Chicago, 10.6 percent in Houston and 7.1 percent in
Boston. On the opposite end, health care and social as-
sistance—one of the lowest paying industries—compris-
es a much larger share of jobs in New York than in other
cities. In 2007, it made up 17.4 percent of all private sec-
tor jobs in New York City, up from 12.7 percent in 1990.
By  comparison,  Charlotte  (8.6  percent),  Washington,
DC  (9.7  percent),  San  Francisco  (10.8  percent),  Hous-
ton (10.9 percent), Los Angeles (11.0 percent), Chicago
(11.8 percent) and Boston (15.8 percent) all had smaller
shares of their private workforce in this field in 2007.

Unfortunately, even before the recent Wall Street

meltdown, there were few signs that the city’s econ-
omy will begin producing more middle-income jobs
anytime soon. Almost all of the occupations that are
expected to grow the most in New York City over the
next  half-decade  pay  low  wages.  Of  the  10  occupa-
tions  that  are  expected  to  have  the  largest  number
of annual job openings in the city through 2014, only
two offer median wages greater than $28,000 a year.
Taking  a  wider  view,  16  of  the  40  occupations  pro-
jected to have the largest number of annual job open-
ings over the same period pay median wages below
$30,000 a year, while another six pay between $30,000

and $40,000.

A third factor working against middle class New

Yorkers is the inferior quality of the city’s public
schools, which continue to push large numbers of mid-
dle class families out of the five boroughs. Despite some
improvement in school performance under the Bloom-
berg administration, our research finds that many fami-
lies who would otherwise stay in the city end up leaving
when their kids are ready to enter elementary or middle
school. Simply put, many parents have no faith in the
city’s schools, and either can’t afford private schools or
simply prefer public schools in another location.

For years, the city’s network of parochial schools

provided a quality educational alternative at relatively
affordable rates for many middle class families. Though
a number of them undeniably remain standout institu-
tions, several New Yorkers interviewed for this study be-
lieve that parochial schools no longer offer the strong al-
ternative they once did. In many cases, tuition has gone
up considerably; more importantly, dozens of schools
have closed and many of those that remain struggle with
large class sizes and unlicensed instructors.

Fourth, long commuting times on public transpor-

tation have caused a serious diminution of the qual-
ity of life for countless New Yorkers living outside of
Manhattan,  prompting  many  to  consider  moving  to
suburban  communities  where  commutes  might  be
shorter or more comfortable. As the ever-higher cost
of housing has impelled these middle class residents
further out into the other four boroughs, the frequen-
cy and quality of public transportation to these areas
has not kept pace. Nationally, the average trip to work
takes  25.5  minutes,  but  for  outer  borough  residents
it takes far longer—from 38.5 minutes in Greenpoint
and  45.3  minutes  in  Bensonhurst  to  49.5  minutes  in
Co-op City and 51.7 minutes in St. Albans.

Finally, much recent residential development in the

middle class enclaves that remain often seems disturb-
ingly out of scale with existing neighborhoods. This con-
stitutes a major source of consternation for community
residents, many of whom specifically chose their loca-
tions for the amenities of one- and two-family homes,
quiet streets and ample parking.

To be sure, the city’s middle class may find some

short-term relief as home prices and apartment rents
continue to plunge in the months ahead. And with new
building projects practically grounding to a halt, concerns
about overdevelopment will at least temporarily abate.

Yet, some of the problems we identify in this report

will only get worse. The acceleration of the city’s eco-
nomic crisis—which is expected to produce 243,000 job
losses over the next two years—will undoubtedly push
numerous working poor residents deeper into poverty
and bring financial insecurity to scores of solidly middle
class families that bought expensive homes here in re-
cent years based on the expectation that two members
of the household would hold full-time jobs. Meanwhile,
MTA budget cuts will result in fewer trains and buses—
not more. And budget cuts planned for the Department
of Education will strain efforts to improve city schools.

Finally, while some basic expenses will come down

in price, others will stay the same or go up. For instance,
Con Edison recently won preliminary approval from the
state to raise electricity prices by roughly eight percent.
Subway fares, property tax rates and sales taxes are also
poised to increase.

Unless we find ways to reverse some of the trends

detailed in this report, the New York of the 21st centu-
ry will continue to develop into a city that is made up
increasingly of the rich, the poor, immigrant newcom-
ers and a largely nomadic population of younger peo-
ple who exit once they enter their 30s and begin es-
tablishing families. Although such a population might
sustain the current “luxury city”—as Mayor Michael
Bloomberg famously described New York—it betrays
the city’s aspirational heritage. Further, a New York
largely denuded of its middle class will find it nearly
impossible to sustain a diversified economy, the im-
portance of which is clearer than ever in light of the
current finance-led recession.

As a final consideration, a large and thriving middle

class has always provided the ballast that a great city re-
quires. Throughout modern history, such cities at their
height—for example, Venice in the 15th century and Am-
sterdam in the 17th—have nurtured a large and growing
middle class. But no city has had a greater history as a
middle class incubator than New York. As the legend-
ary urbanist and long time New York resident Jane Ja-
cobs once noted: “A metropolitan economy, if working
well, is constantly transforming many poor people into
middle class people, many illiterates into skilled people,
many greenhorns into competent citizens… Cities don’t
lure the middle class. They create it.”

Although some may suggest that this is a role New

York can no longer play, we believe it is one that the city
needs to address if it is to remain a truly great city.

In most cities, the question of how to define “middle
class” is pretty easily answered: researchers generally
consider 80 to 120 percent of an area’s median family
income as the parameters of middle class, a formula
also  used  by  some  government  housing  agencies  to
determine income limits for middle-income housing.
New  York  City’s  median  household  income  in  2007
was  $48,631,

which implies that families with an-

nual incomes between $38,905 and $58,937 meet the
definition of middle class.

Given the vastly higher cost of living in New York

City, however, it is doubtful that any New York house-
hold that earns even $60,000 per year enjoys a qual-
ity of life that remotely approaches what we typically
imagine as “middle class.” The “New York City premi-
um” on goods and services from housing and grocer-
ies to utilities and transportation means that a $60,000
salary earned in Manhattan is the equivalent of mak-
ing $26,092 in Atlanta; $31,124 in Miami; and $35,405
in Boston. In less-expensive Queens, that same $60,000
salary carries only as much purchasing power as $37,451
in Atlanta, $44,673 in Miami, or $50,819 in Boston.

In other words, income levels that would enable a

very comfortable lifestyle in other locales barely suf-
fice  to  provide  the  basics  in  New  York  City.  “What
you would call middle class elsewhere you would call
working poor here,” says Lilian Roberts, president of
DC 37, the city’s largest municipal union. “Most of our
members  have  all  the  status  symbols  of  the  middle
class,  including  credit  cards,  TVs  and  cars.  So  they
don’t see themselves as being poor, even when they
can’t afford decent health care or child care.”

“Together, my wife and I make about $160,000

a year,” adds one nonprofit executive who lives in
Brooklyn with his wife and two kids, one of which at-
tends a private middle school and the other a public
elementary school. “In pretty much any other city,
that would put us in the top one percent. Here, we’re
just digging out of a hole.”

A 2006 report by the Drum Major Institute, a

policy institute, concluded “it actually takes$75,000 to

$135,000 for a family of four to have a middle-class
standard of living in New York. For a single individu-
al, the middle class range is $45,000 to $90,000.”

People we interviewed for this report generally

agree that families making well over $100,000 are mere-
ly middle class in New York. Some argue that families
with two or more kids are still middle class if they have
a combined income of $200,000. “Middle class to me
is over $100,000, says Siu Kwan Chan, director of the
Renaissance Economic Development Corporation, a
subsidiary of Asian Americans for Equality. “$50,000 is
really difficult to survive on in New York.”

Many we spoke with say that income is less rel-

evant to defining New York’s middle class than when
they bought their apartment. “What is middle class?
It depends when you got into the real estate market,”
says Jay Greenspan, a freelance writer living in Brook-
lyn. “If you got into the market 10 to 15 years ago, you
can earn $75,000 a year [and be middle class]. If you’re
trying to get in today, it probably takes $250,000.”

Historically, the popularly understood definition

of middle class has often gone beyond income lev-
els to include education and other intangible factors.
This is how David K. Shipler described the term in a
1969 article about the middle class in the New York
Times: “The term ‘middle class’ is difficult to define
by income, because it connotes not just earning pow-
er, but a style of life, a set of values and tastes, a level
of education and a class of occupation.”

We take a relatively loose definition of middle

class. In this study, we use it to indicate those who own
homes or have the prospect of becoming homeowners,
earn at least in the middle quintile of wages and en-
joy a modicum of economic stability. The last point may
be the most critical today. In that sense, being middle
class means having enough money coming in—or in re-
serve—that you can pay your bills every month, have
health insurance, own a home computer or laptop with
Internet access, afford to live in a safe neighborhood,
send your kids to a quality public school and take a va-
cation at least once a year.

WHO IS MIDDLE CLASS IN NEW YORK?

WHY IS A MIDDLE CLASS IMPORTANT?

Is it really that important to worry about the possible
decline of New York’s middle class when the city has
added so many well-heeled residents in recent years?
For us, the answer is an emphatic “yes.”

There’s no doubt that the growing number of af-

fluent New Yorkers has brought considerable benefits
to the city. Their outsized incomes and lavish spend-
ing pumped billions of dollars into city coffers, fueled
a good part of the now-fading housing boom and the
growth of thousands of jobs in industries that service
their luxurious needs, from dog walkers to limo driv-
ers. Their purchasing power also spurred countless
entrepreneurs to open high-end restaurants, wine
bars and custom furniture shops.

Yet, the middle class are ultimately more impor-

tant  to  New  York’s  success  and  future  growth.  The
middle  class  are  the  backbone  of  the  city’s  work-
force—the  book  editors,  web  designers,  lab  tech-
nicians,  architects,  nurses,  paralegals,  actors,  uni-
versity  professors,  carpenters  and  bus  drivers  that
provide  the  foundation  for  so  many  key  industries.
“The middle class are the professional people that re-
ally make the city run,” says Rev. Edwin Reed, chief
financial officer of the Greater Allen AME Cathedral,
a Jamaica-based congregation.

The middle class contributes significantly to the

city’s  vitality  and  vibrancy.  They  are  far  more  di-
verse  than  the  wealthy,  not  only  ethnically  but  also
in  terms  of  their  backgrounds,  shopping  habits  and
entertainment choices. While they may not regularly
frequent boutiques on Madison Avenue or the city’s
four-star  restaurants,  the  middle  class  provides  the
customer base for a wide mix of businesses across the
city, including many of the independent stores, cafés,
shops and cultural venues that help give New York its
unique identity. They also add to New York’s street
life simply by being in the city; while many wealthy
residents leave the city on the weekends for second
and third homes in Aspen, the Hamptons and other
hot spots, the middle class are more likely to stay put
and spend their weekends in the city.

When neighborhoods become for upper-income

residents only, or are dominated by foreign owners
who live here part-time, street life declines and en-
trepreneurs take fewer chances with new retail, din-
ing and entertainment ventures.

As such, the middle class provides critical stabil-

ity as well as vitality to neighborhoods across the city.
While the wealthy tend to be concentrated in Manhat-
tan and a few neighborhoods in the other boroughs,
the middle class are found in nearly every corner of the
city. They account for a large share of the city’s hom-
eowners, who have a built-in self interest in ensuring
the long-term health of their communities. But whether
they own or rent, middle class New Yorkers tend to be
more engaged in local civic matters than the wealthy,
who have the luxury of being able to move elsewhere
if the going gets tough. In community after community,
middle class residents have pressured local officials
and principals to improve the local schools, while af-
fluent New Yorkers typically send their kids to private
schools and have no stake in the public school system.

Data indicates that the middle class vote in higher

numbers and take a more active involvement in their
children’s school than the poor. In the 2004 presiden-
tial election, the voting rate of citizens in the United
States living in families with annual incomes greater
than $50,000 was 77 percent, compared with 48 per-
cent for those living in families with incomes under
$20,000. Similarly, registration and voting rates in-
crease at every successive level of educational attain-
ment: citizens with a bachelor’s degree have a voting
rate of 78 percent; almost double that of those who
had not completed high school (40 percent).

Meanwhile, 80 percent of parents with at least a

bachelor’s  degree  attended  an  event  at  their  child’s
school, compared to 45 percent of parents with less
than  a  high  school  education.  At  the  same  time,  45
percent  parents  in  households  that  are  above  the
poverty level acted as a volunteer or served on a com-
mittee at their kid’s school, compared to 27 percent
for parents living at or below the poverty line.

A great city by its very nature enables possibilities
that could not come to be anywhere else. Perhaps no
place has shown this dynamic through the centuries
more than Amsterdam, the city whose financiers and
entrepreneurs did so much to shape New York. Des-
cartes observed that, in his day, this great Dutch city
represented an “inventory of the possible.”

Holland’s expanding middle class proved critical

to its development as both a major business and cul-
tural center in the early 17th century. The greatness
of Amsterdam in particular grew as a highly diverse
and entrepreneurial population made economic, cul-
tural and social innovations unmatched anywhere in
contemporary Europe. In much the same way, by the
mid-1600s, its namesake New Amsterdam, a tiny set-
tlement on Manhattan Island, also lured an astound-
ing variety of citizens among its 1,000 residents. Eigh-
teen languages were spoken and numerous faiths
practiced.

Appropriately, the counting house, not

the church or any public building, stood as the most
important civic building.

Even after the Dutch were pushed out of the new

colony by the militarily more powerful and more nu-
merous British,

the bustling island city—renamed

New York—retained its character as a fundamentally
commercial  city.  Seeing  the  greater  opportunities
before  them,  most  of  the  Dutch,  Walloons,  French,
Jews  and  Africans  chose  to  remain  after  the  trans-
fer of power and continued to increase their numbers
under British rule.

Those who followed came largely because they saw

in New York an ideal environment for skilled artisans
and traders with high expectations.

The city’s pre-

eminence rested not on political power but on its role
as the leading port for both goods and immigrants.

Other important cities of the early 19th century, includ-
ing Philadelphia and Boston, also created great oppor-
tunities for their residents, but New York emerged as
the principal North American bastion for those seek-
ing to improve their lives.

As historians Charles and

Mary Beard noted of New York’s residents, “All save
the most wretched had aspirations.”

Manhattan

San Francisco

Queens

Nassau County, NY

Los Angeles/Long Beach

Boston

Bergen/Passaic Counties, NJ

Philadelphia

Chicago

Atlanta

Charlotte

Houston

HOW MUCH DOES IT TAKE TO BE MIDDLE CLASS?

An analysis of what a person living in Manhattan, Queens and other cities needs to make to

enjoy a similar standard of living as someone earning $50,000 a year in Houston

Source: All calculations from the Cost of Living comparison tool on CNNMoney.com: http://cgi.money.cnn.com/tools/costofliving/costofliving.html. Calculations made on January 29, 2009.

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$123,322

$95,489

$85,918

$83,168

$80,583

$72,772

$72,387

$69,196

$63,421

$53,630

$51,430

$50,000

THE CITY OF ASPIRATION: A HISTORICAL

OVERVIEW

Average Salary Needed

New York’s 19th century growth was rapid and

mostly unplanned, the result of largely unrestrained
entrepreneurial energies coupled with a strong com-
mitment to development of critical basic infrastruc-
ture. Gotham was to that century what Los Angeles,
Phoenix, and Houston would be to the next. The
sense of opportunity and lack of class stability star-
tled many Europeans. As the French consul to New
York complained in 1810: “…the inhabitants…have in
general no mind for anything but business.”

Early New York was not inherently pleasant or

culturally  edifying.  Although  its  wealth  ultimately
would make New York the world’s cultural capital,
visitors from more genteel Philadelphia and Boston
often  regarded  19th  century  New  Yorkers  as  crass
and far too money-oriented: New York did not have
a  major  public  fine  arts  institution  until  the  late
1870s.

New York’s urban culture was shaped far more by

the efforts of ambitious entrepreneurs than intellectu-
als or philosophers; the result was a dynamic social en-
vironment in which many who got their starts as skilled
artisans and shopkeepers quickly rose into the ranks of
the middle class—and, frequently, even higher.

NEW YORK’S SOCIAL AND ECONOMIC EVOLUTION

By the eve of the Civil War, New York was not only
the  nation’s  premier  port  but  its  largest  industrial
city, a status it would retain for over a century. Many
of the sectors that contributed to New York’s preemi-
nence—such as the garment industry, which was to
become  the  largest  locus  of  manufacturing  employ-
ment—came  from  the  strenuous  efforts  of  immi-
grants.

Initially many of those who worked in garments

were poorly paid. But over the 20th century the indus-
try performed two critical functions. First, it provided
opportunities for small shop owners, jobbers, lenders
and manufacturers, many of them Jewish immigrants,
to enter the middle and even upper middle class. Gar-
ment firms could be started with relatively little mon-
ey; sewing machines and other needed equipment
were relatively inexpensive. Financing was readily
available, and skilled workers, such as cutters and tai-
lors, often became factory owners and provided an op-
portunity path for upward mobility to newcomers with
limited educational backgrounds.

The second function emerged throughout the early

decades of the 20th century, as workers in the garment
industry gradually became organized. Although never
as well-compensated as some workers in other indus-
trial sectors, garment workers gradually won benefits
such as health care, access to low-cost housing and
pensions. For many, the legacy of the “sweatshop” may
not have been riches, but particularly in union shops,
work at least offered a path out of poverty and into the
lower reaches of the middle class.

Although garments represented the city’s larg-

est  manufacturing  industry,  this  pattern  of  smaller
shops  proliferated  throughout  the  economy.  Unlike
the  industrial  Midwest,  New  York’s  economy  was
dominated not by large-scale production but by liter-
ally thousands of smaller shops, each representing an
opportunity for at least one family to climb into the
middle class and beyond. French historian Fernand
Braudel  noted  that  this  unique  industrial  structure
lay  at  the  root  of  New  York’s  mid-century  prosper-
ity, and that prosperity evaporated as that structure
began to decay: “Over the twenty years or so before
the  crisis  of  the  1970s,  New  York—at  that  time  the
leading industrial city in the World—saw the decline
of one after another of the little firms, employing less
than  thirty  people,  which  made  up  its  commercial
and  industrial  substance—the  huge  clothing  sector,
hundreds of small printers, many food industries and
small  builders—all  contributing  to  a  truly  ‘competi-
tive’ world whose little units were both in competition
with, yet truly dependent on each other.”

This economy of “the little men,” as Braudel de-

scribes it,

absorbed not only foreigners, but new-

comers from rural America, including by the early
20th century many African-Americans. As sociologist
Gunnar Myrdal noted in 1944, the “Great Migration”
of African-Americans from the rural south to places
such as Harlem created “a fundamental redefinition
of the Negro’s status in America.” Urban life had its
horrors, but in the cities it became increasing difficult
to restrict a person into “tight caste boundaries.” Af-
rican-American migrants from the South may have
been different in many ways from immigrants from
Italy, Ireland or Russia, but their fundamental aspi-
rations were often very much the same.

While barriers of racial and ethnic prejudice,

resistance to newcomers from local business elites,
and periodic recessions all lined the road to upward

mobility, opportunities generally expanded for the
middle class through the period of years between the
1930s and the 1970s. This epoch can be seen as a kind
of golden age of the aspirational city, with the mid-
dle and working classes making unprecedented new
gains, particularly after the Second World War.

THE RISE OF THE OUTER BOROUGHS

These gains were not just monetary. Modern urban-
ists might romanticize life in the dense, crowded in-
ner cities, but for millions of New Yorkers, the move
out of the core offered a vastly improved way of life.
As the city expanded outwards, families could enjoy
both access to the urban economy and a more bucolic
setting. This process was accelerated by the incorpo-
ration of the outer boroughs into New York City in
1898 and further enabled by rail construction and, for
better and for worse, new intra-city highways.

The consolidation not only made New York the

empire city, but also allowed for the evolution of a
new kind of urbanity spread across 322 square miles,
by far the largest city east of the Mississippi. New
York, as demographer Andrew Beveridge has noted,
was “the Sunbelt of the 1910s and 1920s,” with a pop-
ulation that doubled between 1900 and 1930.

Most of this growth took place outside Manhattan.

The massive public works constructed under Robert
Moses in New York allowed places like Queens, long a
rural backwater, to nurture the creation of new bedroom
communities.

Notably, the construction of the Bronx

Whitestone Bridge in 1939 opened up then-fairly ex-
clusive northwest Queens to working class settlers from
highly congested parts of the Bronx or Manhattan.

The rapid growth of the outer boroughs not only

relieved the burgeoning inner city—New York’s pop-
ulation nearly doubled in the first half of the 20th
century—but also created a new kind of urban life,
which added the pleasures of the single family home
and automobile to older patterns of settlement. Critics
derided the tracts of Tudors, ranches, and colonials
that rose chock-a-block as tasteless; historian Robert
Caro described them as “blossoming hideously.”

Yet these new places—simultaneously urban

and suburban—offered willing occupants an attrac-
tive alternative to the tenement life that they suffered
in Manhattan, Downtown Brooklyn, and the South
Bronx. In the 1920s alone, more than a million people

joined this exodus outward. The movement, acceler-
ated by highway construction, also brutalized many
neighborhoods and worsened conditions for the ur-
ban poor who were now left behind.

Yet overall, the

dispersion of New York offered millions something
that they wanted: an affordable place that provided
a “middle landscape” of tree-lined streets, parks, and
broad car-friendly boulevards.

This pattern of decentralization supported not

only  the  expansion  of  Manhattan’s  office  economy,
which could be accessed by public transit, but also a
geographically diversified economy based around such
activities  as  manufacturing,  warehousing  and  local
business services. The port was king; by the 1920s half
of the country’s imports and exports ran through New
York Harbor. Although Manhattan always retained its
preeminence,  Downtown  Brooklyn  and  many  other
smaller  regional  centers  maintained  their  own  vital
economies. The city spent a significant portion of its
vast wealth on bridges, tunnels, transit lines and other
infrastructure to knit the boroughs together.

The third quarter of the 20th century saw the

decimation of this diverse economy, and with it much
of New York’s wherewithal to create and sustain
middle class jobs and lifestyles. In less than a quar-
ter century, the city lost 80 percent of its generally
well-paying 50,000 longshoreman jobs and hundreds
of thousands of similarly compensated industrial po-
sitions. The high-end service economy based in Man-
hattan continued, on and off, to expand and contract,
but this more diverse economy—both in geographical
and sectoral terms—waned, with the outer boroughs
taking a disproportionate hit.

Traditional middle class bastions in the outer

boroughs shrank, as did their diversified economy.
“Manhattan’s wealth has been a curse to Brooklyn,”
suggests Cooper Union historian Fred Siegel, himself
a long-time resident of Flatbush. “The city’s infra-
structure was allowed to collapse because Wall Street
was doing well and Manhattan thought the city didn’t
need an old-fashioned industrial base.”

With that Wall Street-dominated economy in

deep trouble, this danger of the city’s dependence on
Manhattan has never been greater. As we will sug-
gest below, there is a clear need to return to some
semblance of the geographic and industrial diversity
that served New York so well in the first half of the
last century.

WHY THEY CAN’T MAKE IT HERE

New York’s exorbitant cost of living is making the city out of reach
for many in the middle class

$40

$35

$30

$25

$20

$15

$10

TALK IS CHEAP, ExCEPT IN NEW YORK

Monthly telephone costs are significantly higher in New York than other major cities

Source: Federal Communications Commission, “Reference Book of Rates, Price Indices, and Household Expenditures for Telephone Service, 2007.

$34.00

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ll,

New

York

Bost

Phila

delp

hia

Hou

ston

Miam

Wash

ingto

n, DC

Chic

ago

Los A

ngel

San

Fran

cisco

$29.80

$24.68

$23.12

$22.36

$21.34

$21.27

$18.76

$17.10

PART II

If it wasn’t already clear that the cost of living in New
York City is greatly out-of-whack with the rest of the
country,  it  certainly  became  apparent  in  early  2008
when a new condo development in Brooklyn Heights
began  selling  individual  parking  spaces—not  apart-
ments,  parking  spaces—for  as  much  as  $280,000.

Of course, many New Yorkers don’t even own cars,
and  few  of  those  who  do  pay  such  absurd  prices:  a
garage today generally rents for between $2,000 and
$5,000  a  year  in  neighborhoods  like  Sunnyside  and
Park  Slope.  Yet,  the  case  illustrates  a  sober  reality
about life in the five boroughs: New Yorkers not only
pay among the highest prices in the country for basic
necessities, but they also frequently have to dig into
their wallets to pay for things people elsewhere get
for free or much less.

New Yorkers pay considerably more for hous-

ing, on average, than people in every other city
in the country. (See “Through the Roof, page 19)

But housing constitutes only one element of New
York’s  out-of-sight  cost  of  living.  City  residents
also  pay  more  in  taxes,  electric  bills,  groceries,
phone  bills  and  virtually  every  other  imaginable
expense.  And  many  New  Yorkers  also  have  to
shell out some of the highest prices anywhere for
child  care,  secondary  education  and,  yes,  park-
ing—costs  that  many  people  in  other  cities  are
able to avoid.

All of this adds up to exert enormous pressure

on city households. Even though New York salaries
tend to be somewhat higher for middle class profes-
sionals than those in other parts of the country, the
overall cost of living makes it difficult, if not impos-
sible, for most to enjoy the money they make in a
manner they could elsewhere. A comparison below
between the actual cost of living and average sala-
ries in New York, Houston, Dallas and other cities
makes this clear.

250

200

150

100

LUxURY CITY

Manhattan tops the list of the nation’s ten most expensive urban areas; Queens is fifth

Source: ACCRA Cost of Living Index

224.2

f L

Man

hatt

San

Fran

cisco

Hon

olulu

San

Jose

Que

ens

Oran

ge C

ount

y, CA

Nass

au C

ount

y, NY

Oakl

and

Los A

ngel

es/L

ong

Beac

173.6

163.6

157.4

156.2

152.2

151.2

146.5

Stam

ford

, CT

146.1

The “NYC premium” also makes it exceedingly

difficult for poor and working class New Yorkers to
get out from under their debts and develop a mea-
sure  of  economic  security.  It  creates  high  barriers
to  home  ownership,  forces  a  broad  range  of  New
Yorkers  to  devote  funds  towards  immediate  ex-
penses instead of saving for a home, retirement or
a  child’s  college  education  and  leaves  little  wiggle
room for both the poor and the moderately well-off
to  weather  unexpected  events,  such  as  a  layoff  or
medical emergency.

The city’s steep costs are perhaps the single big-

gest  reason  why  so  many  middle  class  New  York-
ers  leave  the  city  every  year.  “I  know  lots  of  people
who’ve left when they have kids. They just can’t af-
ford it,” says Heather Chaplin, a freelance writer and
author  who  lives  in  Park  Slope.  Though  she  made
around $65,000 in income in 2007 and lives in a con-
do she bought in 2001, prior to the recent run-up in
housing prices, Chaplin says that it’s difficult to stay
ahead  of  her  bills  living  here.  “I  don’t  shop.  I  don’t
eat out. I don’t get cable. I don’t get any magazines.
I  cancelled  my  New  York  Times  subscription.  I  can-
celled my [landline] phone. I don’t have a retirement
account,” she says. “But it’s hard to keep my expenses
under $5,000 a month between mortgage condo fees,
membership at Brooklyn Writers Space [a facility in
the neighborhood used by freelance writers], Con Ed,
cell phone and groceries.”

New York has always been an expensive place to

live, but the costs have gone up significantly in recent
years, as expenses have risen much faster than wages.
“Gas, housing, electricity, food. . . it has all gone up and
our wages have not [kept pace],” says Jim Tucciarel-
li, president of Local 1320, which represents roughly
900 sewage treatment plant workers. “It has become
impossible to live in the city on a sewage treatment
worker’s salary.”

David Galarza, a community leader in Sunset

Park,  says  that  the  city’s  escalating  costs  are  not
only  making  pushing  longtime  residents  out  of  the
working class neighborhood where he works; they’re
actually  prompting  people  living  in  Puerto  Rico  to
think  twice  about  moving  to  New  York.  According
to  Galarza,  Puerto  Ricans  are  again  in  the  process
of migrating to the States, in part due to recent eco-
nomic problems on the island—but not to the fabled
Nuevo York.

“A lot of folks are leaving the island [Puerto Rico]

and coming back to the U.S., but not to New York,” Galar-
za says. “Years ago it was a given that you came to the
largest Puerto Rican community outside of Puerto Rico
[New York]. But many can’t make it here anymore.”

According to the U.S. Bureau of Labor Statistics,

the  cost  of  living  in  New  York  climbed  faster  than
most  other  cities  during  the  past  decade.  Between
1997  and  2006,  the  city’s  consumer  price  index,  a
leading  indicator  of  changes  in  the  prices  paid  by

consumers for a representative basket of goods and
services, increased by 29.2 percent while the nation-
al average for cities jumped by 25.6 percent.

Addi-

tionally, New York City’s cost of living continued to
climb in the last few years while prices steadied or
declined in several other major cities. For example,
the ACCRA Cost of Living Index rose by 11 percent
in Manhattan and 4 percent in Queens between the
third quarters of 2005 and 2008, while it actually fell
for other expensive cities like San Francisco, Los
Angeles and San Jose.

Today, Manhattan is by far the most expensive

urban area in the country, with a cost of living that’s
more than twice the national average and far ahead
of any other city, according to a cost of living index
developed by ACCRA. The only other New York City
borough included in the ACCRA analysis is Queens,
which has the fifth highest cost of living in the coun-
try, behind only Manhattan, San Francisco, Honolulu
and San Jose.

An individual in Houston who earns $50,000

would  have  to  make  $123,322  in  Manhattan  and
$85,918  in  Queens  to  live  at  the  same  level  of
comfort,  according  to  ACCRA’s  Cost  of  Living
Calculator. Someone  moving  from  Houston  to
Manhattan would pay 68 percent more for grocer-
ies, 447 percent more for housing, 54 percent more
for utilities, 22 percent more for transportation and
38 percent more for health care.

Our analysis shows that this data might not even

capture the full extent to which costs in New York out-
pace the rest of the nation and create an overwhelm-
ing burden for middle class New Yorkers. Consider
the following set of expenses:

ELECTRICITY

Electricity bills are higher in New York than any-
where in the nation except Hawaii. And they’ve
climbed sharply in recent years. Residential elec-
tricity prices increased by 27 percent between
2002 and 2007.

Commercial customers in New York paid an av-
erage of 18.37 cents per kilowatt hour (kWh) in
2006, almost twice the national average of 9.46
and substantially higher than other major cities
such as Chicago (7.65 cents per kWh) and Los
Angeles (14.45).

Between 2001 and 2006, average prices increased for
Con Ed commercial customers in the city by nearly
18 percent—from 15.69 cents per kWh to 18.37.

HEATING OIL

Home heating oil prices in New York City in De-
cember 2008 were down considerably from the
previous winter. Yet, even after the recent de-
cline, prices in the five boroughs are nearly triple
what they were a decade ago: the monthly average

•

Apartment Rents

Home Prices

Property Taxes

Milk

Water

Telephone

Home Heating Oil

Electricity

BREAKING THE BANK

Over the past five years, New Yorkers have had to pay significantly more for

everything from milk to home heating oil

Source: Energy Information Administration; Federal Communications Commission; NYC Water Board; New York State Department of Agriculture and Markets; NYC Independent

Budget Office; NYC Department of Finance; CitiHabitats. Property tax levy is for the average 1, 2 and 3 family home in NYC. Telephone bill is for flate rate service from 2002

through October 2006. Home prices are median sales prices for single family homes in NYC. Apartment rents are average Manhattan rents for a 2 bedroom apartment.

20%

40%

60%

80%

100%

120%

140%

16%

77%

67%

60%

34%

16%

125%

27%

Percentage Increase in Selected Prices, 2002 - 2007

home heating oil price rose by 243 percent from
December 1998 to December 2008, from $1.08 per
gallon to $2.78 per gallon. (In December 2007, the
cost was $3.51 per gallon.)

According to an October 2008 analysis by Forbes,
New York City’s home heating costs were the sev-
enth highest among the nation’s leading cities.
One  Astoria  homeowner  interviewed  for  this  re-
port  says  that  heating  oil  prices  have  jumped
from  99  cents  a  gallon  in  1997,  when  he  bought
his attached, two-family house, to $4.20 a gallon
in early 2008. If, as he says, he fills up his 275-gal-
lon tank about once a month between September
and April, his annual fuel bill would have gone up
from $1,906 to $8,805.

AUTO INSURANCE

For this analysis, we computed “ballpark” auto in-
surance rates on Allstate.com for people living in
each of the five boroughs and a handful of other
major cities. We received rate quotes for individu-
als  with  the  same  characteristics—a  37  year-old
married male driving a 2006 Toyota Corolla who
has been in no accidents in the previous five years
and  has  an  excellent  bill  payment  history.  We
then  calculated  rates  for  parts  of  New  York  and
other cities with similar income levels.
The  results  indicated  that  New  York  City  resi-
dents  pay  significantly  more  for  auto  insurance
than their counterparts elsewhere. An individual
with the set of  characteristics noted above would
pay  $880  a  year  on  New  Dorp,  Staten  Island;
$1,040 in Co-op City, the Bronx; $1,140 in Mas-
peth,  Queens;  $1,250  in  Bensonhurst,  Brooklyn;
and  $1,310  in  Inwood,  Manhattan.  In  contrast,
the rates would be $450 in Atlanta; $610 in Wash-
ington, DC, $640 in Chicago, $840 in Houston and
$920  in  Philadelphia;  the  Bensonhurst  resident
would pay between 36 percent (Philadelphia) and
178 percent (Atlanta) more for the same policy.

GROCERIES

New Yorkers pay higher prices for milk than resi-
dents of all but four other cities. In September 2008,
a gallon of whole milk in the city cost an average
of $4.08. Only New Orleans ($4.95), Minneapolis
($4.46), Miami ($4.19) and Kansas City ($4.15) had
higher prices. The national average was $3.82.

•

Between 2002 and 2008, milk prices rose by a
higher percentage in New York City than any
other U.S. city except Milwaukee. The price of
milk here rose by 50 percent; nationally, milk
prices jumped by 33 percent.

Manhattan was the most expensive city for ground
beef, toothpaste and a bottle of wine, according
to ACCRA. It was the second most expensive city
to buy groceries, behind only Honolulu, the most
expensive place for veterinary services and the
fifth most expensive place for a cup of coffee.

PHONE BILLS

New  York  City  had  the  fourth  highest  monthly
landline  phone  rate  among  95  major  U.S.  cities
tracked  by  the  Federal  Communications  Com-
mission (FCC) in October 2006, the most recent
month  for  which  comparative  data  is  available.
Verizon’s flat rate service in New York City cost
$34 at the time, only behind Milwaukee ($37.01),
Racine,  WI  ($36.99)  and  Buffalo  ($35.71).  The
rates in the five boroughs were considerably high-
er  than  other  large  cities,  such  as  Philadelphia
($24.68),  Miami  ($22.36),  Chicago  ($21.27),  Los
Angeles ($18.76) and San Francisco ($17.10).

Telephone rates in New York City increased by 36
percent between 2000 and 2006. Phone bills didn’t
rise as fast elsewhere, such as Los Angeles (with
an 11.2 percent increase during this period), San
Francisco (11.6 percent) and Philadelphia (27.2
percent).

It costs significantly more in New York for telephone
“connection charges including touch-tone, sur-
charges, and taxes” than most other cities. The rate
is $64.53. Of the 95 cities examined by the FCC, only
Tampa, Ansonia, CT and Norwalk, CT had higher
rates. Los Angeles and San Francisco are $35.26.
Chicago is $38.39. Boston is $14.59.

WATER RATES

In 2008, the city approved a 14.5 percent increase
for water and sewer rates in the five boroughs,
the largest increase since 1992. Overall, water and
sewer rates in the city have risen by 77 percent
since 2001.

City officials project that the average owner of a
single-family home will pay $800 for water in fiscal
year 2009, compared to $700 in fiscal year 2008.

•

TAxES

New Yorkers pay higher taxes than people in any
other major U.S. city, roughly 50 percent more
than the average in other large cities. City taxes
alone are 90 percent higher than the average in
other major cities, according to a 2007 study by
the Independent Budget Office.
The average property tax bill for homeowners of
a one-, two- or three-family home in New York
City increased by 87 percent from fiscal year 2000
to fiscal year 2009 (from $1,626.74 to $3,375.85).
Businesses also pay more. The average effective

•

tax rate on businesses is 7.5 percent in the city,
more than twice the rate in Westchester and 70
percent higher than Los Angeles, according to
the Citizens Budget Commission.
New York is one of just 11 states to impose mort-
gage recording tax on the sale of homes. Partly as a
result, it has the most expensive mortgage origina-
tion and closing fees in the country. According to
a 2008 survey by Bankrate.com, a resident of New
York City getting a $200,000 mortgage would pay
an average $3,830 in origination, title and closing
costs—40 percent higher than the U.S. average.

•

CHILD CARE COSTS

To get by in New York, most families need both parents to work full-time—which means spending thou-

sands per year in child care

Living in New York City presents a number of challenges for young families, but none is greater than finding quality, affordable day care.
The four years between birth and pre-kindergarten – which marks the beginning of public school for 54,000 toddlers in New York each
year

– can set parents back financially even more than the cost of paying for college, experts say.

According to government estimates used to gauge the value of vouchers and other subsidies, the market rate cost of nursery school

for toddlers in New York City is $13,260 per year; for infants it is $19,240.

But, depending on the neighborhood, sending a child

to day care for the full day, five days a week can cost as much as $25,000 a year.

And that’s not for a top-of-the-line program on the

Upper East Side, but for basic child care at standard neighborhood organizations.

“New York has an acute shortage of day care centers,” says Betty Holcomb, policy director at Child Care Inc, a Manhattan-based

non-profit. “Regulated arrangements can only accommodate about half of the families that need care. And that affects everybody regard-
less of income.”

Middle class families, however, are the most likely to feel the squeeze. They earn well above the $47,700 cut-off for city-issued

vouchers or federally subsidized programs like Head Start, but cannot manage the five-figure cost of day care.

Holcomb says that at

current rates, a family of three earning $55,000 a year will have to pay nearly half of their income for early childhood care. Families
making $100,000 will often pay more in day care costs than they do in monthly mortgage payments or rent.

Until their recent move to Forest Hills, Noemi Altman and her husband sent their one-year old to a nursery school called Kiddie Korner

in Brooklyn Heights and paid $18,000 a year for full-day care. That meant that they still would have had three more years before they
could send him to public school, costing the parents, who are in their 30s, a grand total of $54,000. At that price, Altman said she had
to think long and hard about going back to work at all. “The job had to pay a whole lot more than $18,000 a year for it to be worth
my while,” she said in a 2008 interview. “I wasn’t going to go back just for the sake of working.”

Manhattan’s so-called “baby boomlet”—the borough’s number of toddlers under the age of four grew 26 percent between 2000

and 2004—has been well-documented and publicized in recent years.

But there’s some evidence of drastically increasing numbers of

young children in the other boroughs as well. Kiddie Korner director Shternie Raskin reports that demand has never been higher. “I’ve
been here [in Downtown Brooklyn] 18 years, and I’ve never had a longer waiting list,” she says.

As a result, day care centers are receiving more applications than they can accept, forcing families to apply to at least five or six differ-

ent places. Besides costing hundreds of dollars in fees, filling out the applications are time-consuming and stressful; more often than not an
interview and play-session are a required part of the admissions process. “One place we applied to,” says Altman, “had a lottery for spots
on the tour, and only on the tour could you get an application. We got into one place out five, and only then after a cancellation.”

According to Holcomb, the city’s day care shortage adversely affects young families most of all, since they typically earn less and

have little in savings. “Affordable, high quality nursery schools can lift up a neighborhood in the same way public schools can,” she says,
“but we don’t invest in the infrastructure and facilities needed to make them accessible.”

Yet the real issue for the middle class is not having babies in the city—New Yorkers seem increasingly comfortable with that—but

in being able to support their families as the children age and as families expand. In this context the crisis in day care could be directly
related to the phenomena of more families with children ultimately choosing to leave the city despite their oft-stated desire to stay.

80%

70%

60%

50%

40%

30%

20%

10%

IS THE AMERICAN DREAM OUT OF REACH IN NEW YORK?

In the third quarter of 2008, a smaller share of homes in the New York City region were

affordable to those earning the median income than any other metro area

Source: Housing Opportunity Index, compiled by the National Association of Home Builders and Wells Fargo, third quarter 2008.

10.6%

New

York

San

Fran

cisco

Los A

ngel

Bost

Chic

ago

Hou

ston

Dalla

Char

lotte

Phoe

nix

16.6%

20.7%

42.8%

47.3%

60.4%

64.1%

68.4%

71.6%

Atlan

72.3%

t o

f h

With  the  average  apartment  in  Manhattan  selling
for  more  than  $1.4  million  (and  the  median  price
$900,000) and studios renting for an average of $1,800
a month in December 2008, it’s hardly surprising that
soaring real estate prices dominated the discussions
in  many  of  the  focus  groups  we  held.

The cost of

buying or renting a house or apartment has risen as-
tronomically over the past five to 10 years—not only
in Manhattan’s toniest neighborhoods, but in commu-
nities from the Northeast Bronx to the South Shore of
Staten Island.

Many New Yorkers are throwing up their hands

in  surrender  and  moving  elsewhere.  Meanwhile,
those  who  stay  are  being  forced  to  dig  deeper  and
deeper into their wallets just to pay the rent or mort-
gage.  Of  course,  the  worsening  economy,  touched
off by a mortgage crisis, seems likely to reduce some
of these sky-high prices—at least in the outer bor-
oughs—over  the  coming  years.  But  mortgages  will
be harder to come by as banks impose much stricter

loan requirements to guard against further cata-
strophic losses. The mortgage meltdown, which
started in heavily low-income parts of the city, now
appears to be spreading to more traditionally middle
class areas.

Under any circumstances, whether they rent or

own, New Yorkers are likely to continue paying a
higher percentage of their incomes for housing than
anywhere in the country, and far more than they did
a decade ago. At the same time, skyrocketing costs
have pushed home ownership out of reach for a large
majority of working New Yorkers in both boom and
bust times.

In the third quarter of 2008, only 10.6 percent

of housing in the metro region was affordable to
people earning the median area income, the low-
est share of anywhere in the country.

Even though

housing prices rose steadily throughout the nation
during the 1990s, most other major cities had a sig-
nificantly higher share of housing that was afford-

THROUGH THE ROOF

The rising cost of housing over the past decade, in virtually every corner of the city, is the
single biggest factor pushing the middle class out of New York

able to middle-income earners, including Boston
(43 percent), Philadelphia (37 percent), Houston (60
percent), Charlotte (68 percent) and Atlanta (72 per-
cent).

Even high-cost San Francisco (17 percent)

and Los Angeles (21 percent) had a notably higher
share of affordable housing.

The affordability gap shouldn’t come as a shock

given the sustained spike in housing prices. Between
1999 and 2006, the median sale price for single-family
homes increased by 209 percent in Manhattan, 147 per-
cent in Queens, 145 percent in Brooklyn, 142 percent
in Staten Island and 131 percent in the Bronx.

Not

only did sales prices jump through the roof during the
past decade; so too did the amounts that homeowners
pay each month in mortgage and maintenance costs.
According to an analysis by professors at Queens Col-
lege, the share of city homeowners spending 35 per-
cent or more of their income on housing jumped from
15 percent in 1990 to 32 percent in 2005.

Renters haven’t had it any easier. In fact, the av-

erage  effective  rent  in  New  York  was  $2,801  in  the
fourth  quarter  of  2008,  according  to  Reis,  Inc.  That
is  down  slightly  from  the  previous  quarter  ($2,856),
but still by far the highest in the nation. The city’s to-
tal was 53 percent higher than the second place city
(San Francisco, where the average effective rent was
$1,827), almost double high-priced San Jose ($1,506)
and nearly triple the national average ($995).

Even amidst the financial crisis, the city’s apart-

ment vacancy rate in the fourth quarter of 2008 was
a tight 2.3 percent, the lowest among the nation’s 79
major apartment markets. That’s notably lower than
San Francisco (3.6 percent), Los Angeles (4.5 per-
cent), Chicago (5.4 percent) and Boston (6.0 percent).
The national average was 6.6 percent.

The U.S. Department of Housing and Urban De-

velopment (HUD) considers households that pay more
than 30 percent of their monthly income on housing
to  be  “cost-burdened”  and  those  paying  more  than
50  percent  of  their  income  to  be  “severely  cost-bur-
dened.” But a recent study showed that nearly 28 per-
cent of New Yorkers—529,171 renters—are paying 50
percent or more of their income toward rent, a 15 per-
cent  increase  since  1999.

Perhaps even worse, our

analysis of Census data from 2006 found that a whop-
ping 40 percent of renters in the city spent 35 percent
or more of their income on rent.

The city’s inflated housing costs contribute to the

high level of out-migration from the five boroughs. In
fact,  an  internal  study  conducted  for  the  Bloomberg
administration in 2006—titled “NYC Movers Study”—
found  that  high  housing  costs  were  the  number  one
reason  people  are  now  moving  out  of  the  city.  The
Movers  survey  attempted  to  duplicate  a  similar  city
study  done  in  1993  that  specifically  examined  what
factors  had  caused  people  to  relocate  out  of  the  five
boroughs.  In  1993,  the  three  most  commonly  cited
“major reasons” for leaving were to have a better life-

$3,000

$2,500

$2,000

$1,500

$1,000

$500

THE BIG SQUEEZE

Rents are on their way down, at last, but in the fourth quarter of 2008 New York City’s average effective rent

was still 53 percent higher than the second place city and nearly triple the U.S. average

Source: Reis, Inc. Monthly rental figures for apartment complexes with 40 units or more (20 or more in CA or AZ). “Effective rents” include free rent incentives and other landlord concessions.

$2,801

New

York

San

Fran

cisco

Fairf

ield

Coun

Bost

San

Jose

Long

Islan

Nort

hern

New

Jers

Los A

ngel

Vent

ura C

ount

$1,827

$1,752

$1,651

$1,506

$1,500

$1,475

$1,410

$1,392

Metro Regions

style (59 percent), to live in a better home or neigh-
borhood (55 percent) and to live someplace safer (54
percent). Thirteen years later, one concern dominat-
ed: housing costs, cited by 64 percent of those asked
for their “major reason” for departing.

“What drove

people out of New York City in 1993 was basic qual-
ity of life issues—crime, safety, neighborhoods,” con-
cluded the authors of the 2006 Movers study. “What is
driving people out today is basically one issue—money
and the cost of living.”

Our interviews certainly confirmed that this is the

case. “Can you live a middle class life in New York,
even in Brooklyn, when it costs $650,000 to buy a two
bedroom apartment in Fort Greene?” asks Jay Greens-
pan, a writer living in Brooklyn.

Greenspan and his wife, who works for a non-

profit, have a combined income of about $160,000. But
because they can’t afford to buy a place in one of the
Brooklyn neighborhoods they like, he and his wife are
going to relocate, most likely to Providence or West-
ern Massachusetts. “We’ve just decided to move. It’s
heartbreaking because we want to stay.”

Jeremy Laufer, district manager of Brooklyn

Community Board 7, which represents Sunset Park
and  Windsor  Terrace,  says  the  property  costs  in
those  neighborhoods  are  significantly  less  than  in
nearby Brooklyn neighborhoods like Park Slope and
Carroll  Gardens.  But  that  doesn’t  make  it  afford-
able. “I think it would be relatively hard for a family

making $60,000 to buy in our area,” Laufer says. “So
many people say to me: ‘My kids can’t afford to live
here anymore.’”

Clearly, many New Yorkers made sacrifices to re-

main in the city. Some simply moved to neighborhoods
farther away from Manhattan’s central business dis-
tricts. Others overextended themselves and went deep
into debt to afford the cost of a home in New York—all
too often, more deeply than they could sustain. A case
in point is the 163 percent spike in foreclosures in New
York City between the third quarters of 2006 and 2008
(from 425 to 1,118), the majority of which occurred in
Queens and Staten Island.

A number of others are cramming into tight

spaces.  In  fact,  several  community  leaders  inter-
viewed  for  this  report  say  that  there  are  growing
instances  of  immigrants  doubling  and  tripling  up
in  neighborhoods  such  as  Manhattan’s  Chinatown
and Sunset Park. Thomas Yu, director of Downtown
Manhattan  Community  Development  Corporation,
an  affiliate  affordable  housing  developer  of  Asian
Americans  For  Equality  recently  said  that  it’s  not
uncommon  to  see  10  Chinese  immigrants  living  in
a  one-bedroom  apartment.  “Immigrants  sharing
apartments is extremely common,” adds Olga Djam,
a  Columbia  native  who  sells  insurance  in  Jackson
Heights and Elmhurst. “Some of my clients will rent
a single family house for $2,100 and split it up be-
tween three families.”

Housing costs

Educational opportunities for kids

Change in job for you/spouse

Better weather/environment

Closeness to family/friends

Wanted a different lifestyle

Quality of neighborhood/home

Cost of living not housing related

Change in household

Had always planned to leave

Crime

Possibility of terrorism

None of these

Ease of commuting

Academic opportunities

To be near more similar people

WHAT DRIVES RESIDENTS OUT OF NEW YORK?

Source: Survey of outmigrants from New York City, published in “NYC Movers Study,” a report by Harris Interactive for the City

of New York, 2006

10%

15%

20%

25%

23%

10%

ACADEMIC OPPORTUNITIES

Percent of outmigrants who say this is “the most important” reason they moved out of NYC

New  York’s  uniquely  high  cost  of  living  is  a  major
reason  why  so  many  New  Yorkers  today  are  strug-
gling.  But  these  problems  are  magnified  by  a  local
economy  that  no  longer  produces  vast  numbers  of
jobs  that  pay  middle-income  wages  and  offer  clear
paths to advancement. The result is that large num-
bers of people in the five boroughs are working but
not earning enough to live comfortably, save money
or get ahead.

During the city’s middle class heyday in the

mid-20th century, New York’s highly diversified
economy was a powerful and steady engine creat-

ing  decent-paying  jobs  for  people  with  a  range  of
skills and backgrounds—from educated profession-
als and artisans to people with only a high school
degree  and  immigrants  with  limited  English  lan-
guage  abilities.  With  strong  assistance  from  the
powerful  labor  movement  and  relatively  progres-
sive local government, many of these jobs offered a
chance for mobility.

Unfortunately, the story of New York’s economy

over the past few decades has been a relative hol-
lowing out of middle-income jobs in favor of fewer
jobs that confer great wealth and many more that just
offer bare subsistence. Worse, this trend has only ac-
celerated in recent years.

By 1970, New York had already lost hundreds of

thousands of manufacturing jobs. Despite those loss-

es, more than one in five city residents (20.6 percent)
were employed in the manufacturing sector. But in
2000, the sector accounted for just 6.6 percent of all
jobs held by New Yorkers, and the number has con-
tinued to drop.

Manufacturing jobs have disappeared all over

the country, but New York City and its metropoli-
tan  area  have  done  worse  in  retaining  this  sector
than almost anywhere else. In 2007, the manufac-
turing  sector  accounted  for  just  3.2  percent  of  all
private  sector  jobs  in  New  York  City  and  4.6  per-
cent  in  the  New  York  City  metro  region.  The  sec-

tor employs a much larger share in other major re-
gions, such as Los Angeles, where manufacturing
accounts for 12.7 percent of all private sector jobs;
Chicago, in which 11.3 percent of private sector
jobs are in manufacturing; Charlotte (10.8 percent),
Houston (10.6 percent), San Francisco (8.0 percent)
and Boston (7.1 percent).

New York has done almost as poorly in other blue

collar sectors. Nationwide, employment in the whole-
sale trade sector grew by 12.6 percent between 1990
and  2007.  However,  in  New  York  City  and  the  New
York  metro  region,  employment  in  the  sector  de-
clined by 22.2 percent and 22.1 percent, respectively,
during this period. Other major metro areas did much
better: the sector grew by 29.0 percent in Charlotte,
by  23.9  in  Houston  and  0.6  percent  in  Los  Angeles,

NO TICKET TO RIDE

The steady erosion of middle-income jobs in New York has led to falling or stagnant wages
and all-but-eliminated a longstanding path to social mobility

The industries expected to grow the most in New York during the decade ahead
almost exclusively pay low wages. Of the 10 occupations that are expected to
have the largest number of annual job openings in the city through 2014, only
two offer average annual wages greater than $28,000.

while it declined by comparatively smaller percent-
ages in Chicago (a 4.2 percent decrease), San Fran-
cisco (4.9 percent), Philadelphia (11.9 percent) and
Boston (13.4 percent).

Like other U.S. cities, New York has seen sub-

stantial  growth  in  low-wage  sectors  like  retail  and
hospitality.  But  another  sector  that  pays  poorly,
health  care  and  social  assistance,  accounts  for  a
much  larger  share  of  all  private  sector  jobs  in  New
York than other cities. In 2007, the sector accounted
for 17.4 percent of all private sector jobs in New York
City  and  16.9  percent  in  the  metro  region,  up  from
12.7  percent  and  12.1  percent  respectively  in  1990.
By  comparison,  Charlotte  (8.6  percent),  Washing-
ton,  DC  (9.7  percent),  San  Francisco  (10.8  percent),
Houston  (10.9  percent),  Los  Angeles  (11.0  percent),
Chicago (11.8 percent) and Boston (15.8 percent) all
had smaller shares of their private workforce in this
field in 2007.

Citywide, 31.1 percent of workers over the age

of 18 are employed in low-wage jobs—an alarming
ratio.

The movement towards an economy domi-

nated by high-end sectors like finance and busi-
ness services and low-end industries like retail and
healthcare explains in large part why wages have
remained flat for a significant number of New York-
ers—a critical problem as expenses have soared. In

fact, between 1975 and 2007, average weekly wages,
when adjusted for inflation, barely increased in the
boroughs  outside  of  Manhattan.  During  this  peri-
od,  real  weekly  wages  went  up  by  just  1.1  percent
in  Queens,  1.7  percent  in  Brooklyn,  2.5  percent  in
Staten Island and 8.6 percent in the Bronx. In con-
trast, real weekly wages in Manhattan jumped sig-
nificantly (96 percent).

“You have to have three jobs now [to be mid-

dle class in New York],” says Zoe Gaby, a housing
lawyer  who  works  for  a  community  development
organization  in  Elizabeth,  NJ  and  lives  in  Park
Slope.  “That’s  why  middle  class  people  move  out
[of the city]. If you have three jobs, when do you
see your kids?”

Unfortunately, the industries expected to grow

the  most  in  New  York  during  the  decade  ahead  al-
most  exclusively  pay  low  wages.  Of  the  10  occupa-
tions  that  are  expected  to  have  the  largest  number
of annual job openings in the city through 2014, only
two offer average annual wages greater than $28,000.
The top 10 occupations for total job openings, along
with their average annual wages, are:

Retail salesperson ($20,690)
Cashiers ($16,800)
Waiters & waitresses (n/a)
Nurses ($76,490)

1.
2.
3.
4.

14%

12%

10%

WHERE ARE THE MIDDLE-INCOME JOBS?

Industrial jobs are down nationwide, but manufacturing accounts for a much smaller

share of all private sector jobs in New York than other major cities

Source: U.S. Bureau of Labor Statistics.

3.2%

New

York

City

New

York

Met

Bost

San

Fran

cisco

Hou

ston

Char

lotte

Chic

ago

Los A

ngel

4.6%

7.1%

8.0%

10.6%

10.8%

11.3%

12.7%

t o

f a

20%

16%

12%

WHERE ARE THE MIDDLE-INCOME JOBS?

Health care and social assistance, one of the lowest paying sectors in the economy, accounts for a

much larger share of all private sector jobs in New York than other major cities

Source: U.S. Bureau of Labor Statistics.

17.4%

New

York

City

New

York

Met

Bost

Chic

ago

Los A

ngel

Hou

ston

San

Fran

cisco

Wash

ingto

n, DC

Char

lotte

16.9%

15.8%

11.8%

11.0%

10.9%

10.8%

9.7%

8.6%

l a

Home health aides ($20,040)
Janitors and cleaners ($26,660)
Office clerks ($27,830)
Personal and home care aides ($21,230)
Child care workers ($25,440)
Executive secretaries and administrative as-
sistants ($47,240)

The trend toward an “hourglass economy”—swol-

len at the top and bottom, narrow in the middle—largely
remains the same when one widens the list to include
the 40 occupations that are expected to have the larg-
est number of annual job openings in the city through
2014. Sixteen of the occupations have annual median
wages below $30,000, while another six pay between
$30,000 and $40,000. Overall, 24 of the fastest growing
occupations pay less than $50,000; nine pay between
$50,000 and $80,000; none pay between $80,000 and
$130,000; and three pay more than $130,000. (Salary
information was not available for four of the top 40
occupations).

Critically, job growth in higher end sectors has not

been remotely strong enough to make up for the shift
from higher wage employment overall. In the 1980s,
for example, officials could plausibly claim that busi-
ness and financial service growth could offset losses
in manufacturing, warehousing and other sectors.
But since that time, New York’s financial and busi-
ness service sector has ebbed and flowed but has not

5.
6.
7.
8.
9.
10.

even kept pace with the rate of growth in that field
elsewhere. In fact, securities industry job growth in
New York between the mid-1990s and early 2008 was
essentially flat, even as it went up by roughly 30 per-
cent nationwide. Even before the meltdown, industry
employment in the last “boom” never reached its 2000
peak levels.

Today this reliance upon high-end employment

in these few chosen sectors once again looks like an
Achilles  heel  for  the  city  in  general  and  its  current
and aspiring middle class residents in particular, as
it was during New York’s last sustained downturn in
the  early  1990s.  The  recent  financial  crisis  already
has  caused  Wall  Street  giants  Lehman  Brothers,
Bear Stearns and Merrill Lynch to go bankrupt or be
acquired at fire sale prices and led to massive layoffs
at  Citigroup  and  other  major  financial  companies.
Economic experts believe the city’s securities indus-
try will ultimately shed close to 50,000 jobs—a stag-
gering 26 percent of its total employment from early
2008.  Restructuring  of  financial  markets,  suggests
former  Lehman  Brothers  managing  director  David
Shulman, could take as many as three to five years,
depriving the city of a great lure for young talent as
well as a source for employment for upwardly mobile
families.

Overall job losses could reach 243,000 over

the next two years, as people employed by financial
services, both directly and indirectly, are caught up
in the maelstrom.

The high cost of living is clearly taking its toll on New
Yorkers, but for many middle class families, a bigger
problem may be the quality of the public schools. To
be sure, many city schools have improved in recent
years as Mayor Bloomberg has won control over sys-
tem governance and poured in billions of new dollars
to support higher standards of accountability for stu-
dents and teachers alike. But our research suggests
that for a large segment of the city’s middle-income
households, the public education system remains a
primary reason for leaving the city for the suburbs
and other locales.

The city does boast a number of standout

schools,  but  they  tend  to  be  concentrated  in  a
handful  of  neighborhoods  where  housing  prices
are  out  of  reach  for  all  but  the  most  affluent.  In
much of the city, including the outer borough com-
munities  where  housing  is  more  affordable,  the
public  schools—particularly  middle  schools—are
still  widely  perceived  as  inferior  or  unsafe,  and
many middle class parents simply do not consid-
er them an acceptable option. “People like to live
where they feel they have access to a good educa-
tion  for  their  children,”  says  Cheryl  Caddle,  the
chairperson  of  the  educational  committee  of  the
Cambria Heights Civic Association. “A lot of peo-
ple  believe  that  the  public  schools  [in  New  York
City] are subpar.”

Some parents turn to private schools. But many

middle  class  families  simply  can’t  afford  to  pay
from a few thousand dollars to more than $30,000
in  annual  tuition—per  child—for  several  years.
For them, a financially prudent option is simply to
move to suburban districts where they believe the
schools  offer  a  safer  and  more  effective  learning
environment.

This is precisely what has happened in many

middle class neighborhoods in the Northeast Bronx
such as Throgs Neck and Pelham Bay. “There’s

a  flight  out  of  many  middle  class  people  because
of  the  schools,”  notes  City  Councilmember  James
Vacca, a lifelong resident of the area. “A couple gets
married. By the time their children get to age five,
they move. It’s not the housing. It’s the education.
They’re  buying  more  expensive  housing  in  other
areas and paying more property taxes because the
schools are better.”

Migration data confirms what Vacca and so many

other New Yorkers have observed. People who come
to New York in their twenties tend to leave as their
children enter school age.

According to a 2007 report by City Comptroller

William Thompson, households with young children
accounted for almost 40 percent of those who left the
city, but just 12 percent of those moving here.

In the

2006 NYC Movers study of those who have left New
York, ten percent of those surveyed cited “Education-
al opportunities for children” as the “most important
reason” for relocating. Housing costs (23 percent) was
the only factor cited by more respondents.

Mayor Bloomberg has made improving the

schools  a  top  priority,  and  he’s  recently  pointed
to  higher  test  scores  as  proof  that  his  reforms  are
working. But clearly there’s still a lot of work to do.
A national study released in early 2008 showed that
just  45.2  percent  of  city  public  school  kids  earned
on-time high school diplomas, a dismal performance
that puts New York 43rd among 50 large cities in the
United  States—behind  such  cities  as  Los  Angeles,
Chicago, Philadelphia and Atlanta.

“Our education system is failing,” says Tanya

Cruz, a board member of Queens Community Board
13, which covers neighborhoods including Cambria
Heights, Laurelton and Queens Village. “The scores
for the K-8 students are not where they should be.
The dropout rate is alarming. The rate of kids not go-
ing to college is alarming. If you have the income, you
send your kids to private school.”

NOT MAKING THE GRADE

Large numbers of middle class families still leave New York when their kids approach school
age, due to continued problems with the public schools

In another discouraging sign, no city school made

Newsweek’s 2007 ranking of the top 100 public high
schools while just nine are mentioned in the maga-
zine’s longer list of 1,258 excellent high schools. In
contrast, Westchester County boasted 30 such schools,
while Suffolk had 22 and Nassau County 35.

The most serious problems lay with the city’s

middle schools. “The real hole in the system is when
you reach junior high school level. [Those schools
are] usually not very good,” says Eliot Rennert, an
entrepreneur who owns a wine store in Ditmas Park.
While his two daughters are currently enrolled in el-
ementary school in Windsor Terrace, he says there’s
a good chance they will move out of the city after the

kids finish fifth grade.

A 2007 report concluded that the city’s middle

schools  suffer  from  substandard  teachers  and  in-
sufficient  resources,  and  ultimately  “function  as
pathways  to  failure.”

The relatively few excel-

lent  public  middle  schools  are  inundated  with  ap-
plications, forcing them to turn away qualified ap-
plicants. “There are far more students who want to
get into the most coveted middle schools than there
are  spots  for  them,”  writes  Liz  Willen,  founder  of
InsideSchools.org. “Finding a good middle school—
and  then  getting  into  it—is  hard  enough  now;  the
best have a long list of children shut out for lack of
space.”

A PAROCHIAL VIEW

Catholic schools once offered a quality alternative to substandard public schools, but dozens have

been shuttered and those that remain are charging more and have larger class sizes

For many middle class families unsatisfied with the quality of their public schools, the Catholic parochial system long offered
an academically strong and reasonably affordable alternative with a welcome focus on discipline and moral values. This was
particularly the case for the children of disadvantaged immigrants. At their height in the 1950s and ‘60s, Catholic schools
charged a nominal tuition of $100 a year. Through the 1980s, that price climbed to approximately $600 a year for elementary
schools, and $3,000 to $4,000 a year for high schools, which for most families was still relatively affordable. Things have
changed in a big way since then, however. Tuitions have more than doubled and since 2000 nearly every year brings a fresh
wave of school closings.

In just the last decade, the Dioceses of Brooklyn and New York have shuttered over 60 schools in the city (29 in 2005 alone).

The church has cited the rapidly rising cost of operating these schools in an era of high insurance rates and state-of-the-art computer
labs as a reason for their closings. But, according to experts, just as important are the city’s shifting neighborhood demographics and a
subsequent decline in enrollment. In 1970, nearly 400,000 students between kindergarten and 12th grade attended Catholic schools
in New York City and seven neighboring counties in New York State. Today that number is down to 160,000, a 60 percent drop in
less than 40 years.

More than a few New Yorkers find those numbers alarming. Tim and Anne Reidy, who are siblings from the Riverdale section of

the Bronx, both attended Catholic schools growing up and did fundraising work for inner city parochial schools after college. Both feel
they got a top-rate education for a reasonable price and, if they stay in New York City, hope to be able to send their kids to a parochial
school as well. But, according to Anne, who works for the Diocese of Brooklyn, that dream is fast becoming unrealistic. “The world we
grew up in is really over,” she says. “Operating costs have really driven up tuition. When Tim went to Fordham Pratt [a Catholic high
school in the Bronx] in the 1990s, the tuition was $5,000 a year; now it’s $12,000. That doesn’t mean it’s a better school. It just means
it’s a more expensive school.”

Part of what’s ailing the Catholic school system, the Reidys say, is the city’s rapidly changing neighborhoods. Tim, who

works as an editor for a national Catholic magazine, maintains that the more affluent schools like St. Gabriel’s in Riverdale or
St. Luke in Whitestone are going to continue to lose their core of students, which traditionally come from Irish and Italian fami-
lies, as they move away or get priced out of the neighborhood. If Catholic schools are going to continue to play an important
role in New York, Tim says, it will be through poorer inner city schools like Sacred Heart, where he volunteered after college.
He observes that more than 50 percent of the students at that school come from families who fall below the poverty line.

Henry Levin, a professor of education at Columbia University who specializes in the economics of private schools, more

or less agrees. “The Catholic school system will continue to shrink,” he says, “but newly arrived Hispanic immigrants are defi-
nitely a target for growth.” With any luck, maybe these schools will manage to do for them what they did for the immigrants
of decades past.

STUCK ON THE TRAIN

Transit service has not kept pace with growing demand in several neighborhoods outside
of Manhattan, leaving middle class New Yorkers frustrated by long and uncomfortable
commutes

With  housing  prices  in  Manhattan  practically  out
of reach for all but the affluent, the other four bor-
oughs have become increasingly crucial to the city’s
hopes to retain its middle class. But one tradeoff for
many middle class New Yorkers who moved to city
neighborhoods  outside  of  Manhattan  in  search  of
reasonably  priced  housing  is  a  transportation  in-
frastructure that is unable to meet the growing de-
mand.  The  dismal  result  is  overcrowded  subways
and  buses  and  some  of  the  nation’s  longest  com-
muting times.

Though transportation infrastructure is not or-

dinarily considered one of the key problems facing
the middle class, dozens of New Yorkers interviewed

for this report cited their long and often uncomfort-
able commutes as a major drawback to living in the
city—and one of the main reasons they would con-
sider moving. “If you’re commuting for an hour and
a half, when are you going to spend time with your
kids?” asks Olga Djam, an entrepreneur who lives
in Elmhurst.

Indeed, Staten Island, the Bronx, Queens and

Brooklyn  have  the  four  longest  average  commut-
ing  times  of  the  231  counties  in  the  United  States
with  populations  over  250,000.  And  it  isn’t  only
people living in Far Rockway, Tottenville and other
communities  on  the  city’s  outer  reaches  who  suf-
fer  through  super  long  commutes.  The  average

commuting time is 38.5 minutes for those living in
Greenpoint; 37.6 minutes from Astoria; 49.5 min-
utes in Ditmas Park; and 41.7 minutes in Bay Ridge.
These communities have all experienced a signifi-
cant increase in middle class professionals in re-
cent years.

The commutes are typically even longer in a

number  of  other  traditional  middle  class  enclaves,
some  of  which  have  attracted  growing  numbers
of  first-time  homeowners,  such  as  Richmond  Hill
(with a 46.1 minute average commuting time), Co-
op City (49.5 minutes), Bensonhurst (45.3 minutes),
St. Albans (51.7 minutes) and Springfield Gardens
(52.3 minutes).

Most who live in the boroughs say they expected

longer commutes when they moved outside of Man-
hattan, but few expected things to get worse. Yet as
these neighborhoods have fueled most of the city’s
population explosion—and much of the increase in
transit ridership—during the past two decades, this
is  precisely  what  happened.  According  to  the  Tri-
State  Transportation  Campaign,  while  commute
times  across  the  city  dropped  over  three  percent
from  1980  to  1990,  they  rose  by  nearly  seven  per-
cent  between  1990  and  2000—and  that  longer  trip,
in most cases, became more unpleasant at the same
time.  “On  a  lot  of  bus  lines,  people  are  packed  in
there  like  sardines”  says  Yvonne  Reddick,  district

Thirty-nine of the 50 subway stations with the largest percentage increase in
ridership between 1998 and 2006 were in the boroughs or in Manhattan north
of 96th Street. Twenty-two of the 50 were in Brooklyn.

IN TRANSIT

Residents of outer borough communities from Co-op City to St. Albans

have some of the longest commutes in the nation

Source: U.S. Census Bureau, American Fact Finder.

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38.5

Greenpoin

Bensonhurst

Richmond H

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Ditmas P

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Co-op C

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Canarsie

St. A

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45.3

46.1

47.2

49.5

50.4

50.8

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25.1

27.4

28.8

29.6

25.5

manager of Queens Community Board 12, which
covers neighborhoods including Jamaica, Hollis and
Springfield Gardens.

The growing strain on what is already the larg-

est mass transit system in the country has highlighted
the failure of city and state officials to make mean-
ingful  investments  in  increasing  service  or  creating
new  transit  options  in  the  boroughs.  In  part,  this  is
a  function  of  the  unique—and  to  many  New  York-
ers,  uniquely  infuriating—governance  structure  of
the Metropolitan Transit Authority, as well as a fed-
eral funding formula for transportation that includes
a built-in bias against large cities and public transit.
And  even  within  the  city,  the  priorities  remain  in
Manhattan,  from  the  development  of  the  eternally
delayed Second Avenue Subway to the 7 train exten-
sion and costly station improvements for Lower Man-
hattan and Penn Station.

Yet, the rationale for improving and expanding

transit service outside of Manhattan has never been
clearer. Between 1990 and 2005, 87 percent of the
city’s overall gain in population occurred in the four
boroughs outside of Manhattan.

Not surprisingly,

each of these boroughs has experienced significant
spikes in transit ridership. For instance:

Between 1998 and 2006, 81 percent of the in-
crease in bus ridership across the city occurred

•

outside of Manhattan. The number of people
in Manhattan riding city buses rose by 11 per-
cent, but this was far less than the increase in
Queens (24 percent), Staten Island (23 per-
cent), Brooklyn (22 percent) and the Bronx (18
percent).

Thirty-nine of the 50 subway stations with the
largest percentage increase in ridership between
1998 and 2006 were in the boroughs or in Man-
hattan north of 96th Street. Twenty-two of the 50
were in Brooklyn.

In 2006, 54 stations outside of Manhattan had av-
erage weekday ridership over 10,000, compared
to 46 in 2003 and 36 in 1998.

Sonia Flotteron, a mother of two who owns a

children’s  clothing  store  in  Tottenville,  says  that
she and her husband initially moved to Staten Is-
land  for  its  affordability  and  for  a  good  environ-
ment to raise their children. But the time-consum-
ing  and  miserable  experience  of  transportation  is
one of the factors that might ultimately prompt her
family to move out of the city. “What would make
it  more  attractive  for  us  to  stay  on  Staten  Island
is better transportation,” Flotterton says. “My hus-
band  works  on  60th  and  Lexington.  He  takes  the
express  bus  to  34th  Street  and  then  the  subway.
His commute is 1 hour 40 minutes each way.”

•

(in

)

THERE GOES THE NEIGHBORHOOD

During the building boom of the past decade, teardowns and out-of-scale development
have diminished quality of life in many traditional middle class communities

A  growing  number  of  affluent  New  Yorkers  are
choosing  to  raise  their  families  in  upscale  parts  of
Manhattan, at least until school age. But many middle
and working class New Yorkers have opted for neigh-
borhoods  across  the  five  boroughs  with  a  decidedly
more  suburban  feel.  New  York  has  dozens  of  these
traditional  middle  class  neighborhoods,  from  Bay
Ridge to Whitestone, that are dominated by one- and
two-family homes and offer quiet streets and a fam-
ily-friendly environment. But in recent years, a num-
ber  of  these  neighborhoods  have  been  marred  by  a
flurry of development not in scale with the physical
character of the community, executed in a haphazard
fashion and lacking the necessary infrastructure up-
grades to meet the new demand.

Few have associated concerns about unsightly

or unplanned development with the struggles facing
New York’s middle class. However, nearly as many
of those we interviewed cited this issue as one of the
key threats to New York’s ability to retain a middle
class as those who listed the city’s skyrocketing cost
of living.

It’s not difficult to understand why. The build-

ing boom that occurred in nearly every corner of the
city over the last decade included many instances of
developers tearing down large homes to build multi-
story  apartment  buildings,  rows  of  townhouses  or
garish  mansions.  In  numerous  cases,  the  new  de-
velopments  were  built  right  up  against  the  prop-
erty lines, eliminating yards and resulting in hous-
ing spaced too closely together. Some of these new
buildings  may  help  alleviate  the  dire  shortage  of
housing throughout the city, but such development
often undermines the very qualities that make these
neighborhoods attractive.

“I’ve watched probably seven single family

homes knocked down since I came here,” said Nelson
Ryland, a film editor who lives in Ditmas Park with

his wife and children. “They’re putting up six-story
apartment buildings. It’s really a shame to lose the
neighborly feel of the neighborhood.”

The same thing has been occurring in Richmond

Hill  and  other  Southeastern  Queens  neighborhoods,
where stately Victorian homes are being replaced with
a  number  of  less  attractive  dwellings.  “We  are  having
houses demolished. [Developers] would buy the house
for $500,000 and build three or four brick townhouses on
them and triple their money,” one longtime Richmond
Hill  resident  said.  “People  are  also  cementing  their
lawns and people are parking their cars there. There’s
no aesthetic beauty.”

The practice of demolishing homes has become so

common here in recent years that the New York met-
ropolitan region overtook Chicago as the “teardown
capital of the United States,” according to the National
Trust for Historic Preservation.

The Trust’s running

tally of neighborhoods where a significant number of
teardowns have been occurring includes 18 commu-
nities in Queens, the entire borough of Staten Island
and a handful of neighborhoods in Brooklyn and the
Bronx.

100

Beyond merely diminishing the character of

these communities, the wave of haphazard develop-
ment occurring around the city has strained the local
infrastructure. In many areas, the flood of new hous-
ing units and subsequent population surge has led to
overcrowded schools, parking problems, sewer back-
ups and additional traffic.

“I understand there’s going to be growth,” says

one  elected  official  on  Staten  Island,  where  com-
munity  disgust  at  overdevelopment  prompted  of-
ficials  to  pass  a  blanket  downzoning  of  the  entire
borough. “What I’m against is irrational density. The
infrastructure can’t withstand that. Where do people
park? Where do they send people to school? It should
be higher density where it makes sense.”

PART III

SCHOOL’S OUT

University professors are solidly middle class, but large numbers of them are opting to

leave schools in New York for locations where their salaries go a lot farther

In recent years, New York City has become one of the most desirable destinations in the nation for high school students
entering college. But the city’s colleges and universities are finding it increasingly difficult to attract and retain top professors
due to New York’s steep cost of living.

“It may have been true in the past that if you were offered a job at NYU or Columbia, you took it,” says John Curtis,

director of the Department of Research and Policy for the American Association of University Professors (AAUP). “But I don’t
think that’s the case anymore. [Professors] might make a little more money in New York but the difference in salary isn’t
going to be enough to lure a lot of candidates.”

John Esser, a professor of sociology at Staten Island’s Wagner College, says that if he were planning to have kids

with someone who makes as much as he does, he would not still be in New York City. Esser, who rents a one bedroom
apartment in Staten Island, says that when he got here 15 years ago, a down payment of $20,000 was enough to buy
a single family house. That was affordable, but with college and graduate school loans to pay back it was still beyond
his means. Now at age 50, Esser can easily afford a $20,000 mortgage down payment, but that amount isn’t enough
to afford a home. “Wagner has lost a number of [faculty] stars this way,” says Esser.

A good example is Esser’s colleague, Mark Elliot, a history professor at Wagner until recently. In 2008, Elliot

accepted an offer from a university in North Carolina, citing the New York metro region’s high housing costs as his
primary reason for leaving. “We have two kids, and in North Carolina you can get twice the house for half the price,”
says Elliott.

Nichole McDaniels, a 36-year old assistant professor at Bronx Community College, sees herself as a reluctant refugee

of sorts from New York’s high cost of living. She recently moved to New Jersey with her boyfriend because she wants to
start a family and couldn’t find anything in the city limits. “In New Jersey, we got a house with three bedrooms, something
that’s actually practical to have a family and office in,” says McDaniels. “We looked in New York City and decided what
we were seeing wasn’t even close [to what we could afford]. I don’t have expensive tastes. My needs are pretty simple.
But I can’t afford New York.”

Paul Welch, an archeology professor, left Queens College for a tenured, mid-career position at the University of Illinois

Carbondale in 2001 and says one of his biggest reasons for leaving was the city’s high housing costs. “I took a noticeable
pay cut to come here [to southern Illinois], but cost of living has noticeably offset that. I won’t retire with nearly as much
money, but I’m comfortable here,” Welch says. “I saved for 10 years in New York City to buy a house. Here I was able
to buy at the upper end of the market immediately.”

Welch recalls that while he was at Queens College both of the other archaeologists were quietly looking for other

positions outside the city. He says turnover was very high for tenure-track positions: in the 11 years he was there, five as-
sistant professors left Queens College (and the five boroughs) because of cost of living issues.

Of course, deeper-pocketed institutions like NYU, Columbia and Rockefeller University are all able to cope

a little better with the city’s high housing costs by investing in subsidized housing and low interest mortgages for
at least some faculty members. Their average salaries are much higher too. According to 2006 AAUP data, NYU
comes in near the top nationwide with an average annual salary for tenured professors of $144,000. But when
adjusted to a cost of living index, which moves salaries upward or downward according to how a city’s cost of
living compares to the national average, that dropped to a value of $70,098. “Many professors are coming to
CUNY and other smaller regional schools, getting themselves established, and then leaving,” says AAUP’s Curtis.
“Either they leave the city altogether or they go to NYU or Columbia. But even at Columbia housing is an issue that
can’t be ignored.”

SNAPSHOTS OF THE MIDDLE CLASS SQUEEZE

CITY LIMITS

Municipal jobs used to provide a clear path to upward mobility, but today many city work-

ers can’t even afford to live in the five boroughs

Once upon a time, a job with city government was considered a surefire ticket into the middle class. The positions gener-
ally paid well, covered health care and included a pension. But with the cost of housing and other basic expenses in New
York ratcheting well above sustainable levels, many municipal workers in New York can no longer afford to live in the city
that they work for.

“The civil service used to be about upward mobility,” says Henry Garrido, assistant director of District Council 37

(DC 37), the city’s largest union of municipal employees. “It was a path to the middle class.” But, he adds, over the last
ten to 15 years city accountants, electricians, gardeners, tow truck drivers—not to mention teachers, police officers and
firemen—have found it increasingly difficult to survive financially in the five boroughs.

According to DC 37 officials, hundreds of union members have been rendered effectively homeless because of the

city’s skyrocketing rents and a requirement that they live in the five boroughs. Some have had to start living out of their of-
fices; others have had to move in with roommates at the age of 65.

In large part because of the growing financial strain DC 37 members felt living in the city, union leaders have spent

the better part of two years trying to convince lawmakers to repeal a 1986 city law that required many non-uniformed city
employees to live in one of the five boroughs as a condition of employment. The union’s campaign finally met with suc-
cess in December 2008 when the City Council voted to implement a bill that requires DC 37 members to live in the city
limits for two years before they’re allowed to move to any surrounding counties (including Nassau, Westchester, Suffolk,
Orange, Rockland and Putnam).

Teachers have long been able to live outside the city’s borders, but Roni Messer, a 30-year veteran with the

city’s school system, believes that conditions have gotten particularly challenging in recent years. Messer says
that it’s a lot more difficult for teachers starting out now than when she became a teacher. Messer has lived in the
same rent-controlled two bedroom apartment in Peter Cooper Village since 1968; she and her husband raised
two kids there and will probably stay on even after they retire. But she doesn’t see similar options for younger
teachers today.

“On the open market, you can’t get what we have in Manhattan for less than $3,000 a month,” says Messer.

“Our pay [as teachers] has gone up quite a bit recently, but everything else has gone up with it. I did better
earning $30,000 a year in the late 1980s than [earning what] I do now, because the cost of living has gone
up so much.”

Jeannette Downs, who works for the United Federation of Teachers (UFT) helping new teachers adjust to the rigors

of living in the city, says that most young instructors today live outside of Manhattan. Yet even then, the housing costs are
prohibitive for those earning a teacher’s salary. According to Downs, a two-bedroom apartment in Queens now rents for at
least $1,600 a month, a price beyond the budgetary reach of most young teachers, whose salaries start out at $43,000
a year. “I hear a lot of new teachers say ‘I’m not going to put a lot of time in the system because I can’t afford to raise a
family here,’” says Downs.

The high cost of housing, whether in Manhattan or Queens, is why a significant number of city teachers already live

outside the five boroughs. It’s also one of the main reasons why teachers in New York are quitting their jobs at alarming
rates, a trend that has continued even after Mayor Bloomberg granted teachers significant raises that have essentially given
them parity with their brethren in the suburbs. In fact, teachers’ salaries have risen 43 percent in the last seven years, yet
the city’s public schools still lose a third of all new teachers in the first three years of teaching and fully one half of all new
teachers in the first six years.

101

The Office of the New York City Comptroller estimates that in 2005 alone, over 5,000

teachers left the city for other locales.

SNAPSHOTS OF THE MIDDLE CLASS SQUEEZE

DETOUR FROM THE DREAM

Successful immigrants are leaving New York to take their shot at the middle class in other

regions where buying a home and raising a family is easier to attain

New York City continues to serve as one of the nation’s leading gateway cities for new immigrants. Anecdotal evidence
suggests, however, that growing numbers of immigrants who have enjoyed a measure of success in New York are moving
to North Carolina, Georgia, Florida and other states where the cost of living is significantly lower—and where they stand a
better chance to achieve middle class goals like owning a home and saving money to send their children to college.

A number of community leaders and immigrant advocates interviewed for this report told us that there has been a

noticeable increase in immigrants leaving the New York region entirely. Meanwhile, officials in cities like Charlotte, NC
say the influx of New York’s immigrants is evident.

Tom Hanchett, an urban historian who works for a museum in Charlotte called the Museum of the New South, has

been working on a research project about the immigrants who are coming to Charlotte. “New York is the largest donor
state to the Charlotte region,” he says. Recent cutbacks on Wall Street could well accelerate this migration.

102

Experts in New York say there are two principal reasons why the city’s newcomers are relocating: First, the city’s as-

tronomical housing costs make it extremely difficult, if not impossible, for many of them to realize their aspirations of home
ownership. High commercial rents also make it more difficult to build a significant business.

Second, new migration patterns have created a critical mass of ethnic communities in cities that have traditionally

had very little diversity. With more people who speak their language, stores that sell the products they want and houses of
worship serving their faith, immigrants now feel comfortable making the move.

“In other places, especially in the South, they can put $10,000 together and get a mortgage for a new house. That’s

something most Hispanic immigrants can’t even dream of doing in New York City.” says Eduardo Giraldo, an insurance
broker based in Jackson Heights and past president of the Hispanic Chamber of Commerce of Queens. “Some are saying
they’re making more money down there, but even when they don’t, they can buy more with the money they do make.”

ShaKerra Samuels, who was born in Jamaica but grew up in the East Flatbush section of Brooklyn, is one case in point.

After she graduated from college in 2002, Samuels accepted a job with Bank of America in Jacksonville, Florida that paid
roughly half the salary of a similar job in New York. Still, she thinks she has come out ahead in the long run. A year after
moving to Florida, she bought a three bedroom house for $150,000, which, she claims, she could never do in New York.
Samuels says she misses New York a lot, especially the shopping. But she got married in June 2007, and whenever she
thinks about the challenge of raising a family in the city she still regards as home, the nostalgia slowly disappears.

Some New York-based immigrants aren’t just being driven away by the city’s high cost of living. Many business

owners are being lured away by the market opportunities of newer, less established immigrant communities. According
to Elizabeth Perdomo, former program director for the Queens Economic Development Corporation, New York-based im-
migrant entrepreneurs can take the businesses they built under intense market pressures in Jackson Heights and really make
them flourish in the newer immigrant neighborhoods of big southern cities like Charlotte, where there is less competition
and a growing demand. This is particularly true for the owners of multi-services businesses, which provide translation and
tax filing help, among other things, to newly arrived immigrants.

Eligio Pena moved the supermarket chain he founded in Queens to Raleigh, NC in 2000 and then again to Charlotte in

2003. Pena says the growing immigrant populations in many cities in the South have opened up a profitable market for entrepre-
neurs like him. As an example, he observes that in Charlotte the local supermarket chain Winn-Dixie hasn’t figured out how to cater
to the different needs of local ethnic neighborhoods, which is a marketing strategy he puts at the very center of his business model.

Ultimately, however, Pena says that immigrants are moving from large northeastern cities to places in the South for the

same reasons as non-immigrants. “In North Carolina, you can afford a bigger house with a bathroom attached to every
bedroom,” he explains.

PART IV

Of the many daunting challenges in New York City’s
history, perhaps none will be greater than what we
now face in maintaining and nurturing a strong mid-
dle class here against powerful countervailing eco-
nomic forces. But to preserve New York City’s great-
ness, we have no choice.

A New York denuded of its middle class would be

less vibrant, less safe and more vulnerable economi-
cally. In an era when technology allows many business
functions to move seamlessly across global boundar-
ies and more regions than ever before are competing
to woo the most talented and highly-skilled workers,
we must find answers to the questions of affordability
and quality of life that threaten to drive the middle

class out of the five boroughs. The alternative is a
future New York of unprecedented inequality—with
islands of concentrated wealth surrounded by a sea of
deprivation, placing permanent strain on city budgets
and ensuring a dynamic in which “getting ahead” for-
ever means “getting out.”

Such a state of affairs would not mean the end of

New York City, of course. New York might have some
future success as a premier “superstar” city, a term
that Wharton real estate economist Joe Gyourko uses
to describe places like San Francisco, Boston, Los
Angeles—and New York—that have become exceed-
ingly expensive to live and predominantly inhabited

by  the  rich,  the  nomadic  young  and  the  poor.  After
all,  New  York  prospered  in  recent  years  even  as  it
became  increasingly  unaffordable  for  those  making
a middle class salary. But that city would not be the
New York of memory, or history—and in the long run,
such a city is unlikely to sustain a diverse economy
or create the kind of sustainable living environments
that all great cities need.

Ultimately, New York City needs to preserve and

grow a strong middle class because its critical com-
petitive advantage in today’s global economy is its
people. This means more than just hedge fund man-
agers, corporate attorneys and art dealers. It requires
a diverse mix of the individuals who make the city’s

key industries and institutions run—including book
editors, television producers, human resource man-
agers, freelance writers, retail sales managers, pub-
licists, university professors, accountants, nonprofit
caseworkers, illustrators, nurses, chefs, subway engi-
neers, teachers and truck drivers.

New York does well in attracting this talent, par-

ticularly young professionals who settle here in their
early 20s to pursue careers in fields from advertis-
ing and acting to publishing and finance. But as we
have shown in the first part of this report, these ex-
perienced professionals too often leave the city by the
time they reach their 30s.

REVIVING THE MIDDLE CLASS DREAM IN

NEW YORK

Our framework for retaining and growing the city’s middle class calls for everything from
embracing community colleges to improving subway service outside of Manhattan

Ultimately, New York City needs to preserve and grow a strong middle class be-
cause its critical competitive advantage in today’s global economy is its people.
This means more than just hedge fund managers, corporate attorneys and art
dealers. It requires a diverse mix of the individuals who make the city’s key in-
dustries and institutions run.

In the second half of this report, we attempt to lay

a foundation for a new set of policies that can help re-
store New York as a place where middle class individu-
als and families can prosper and where poor and work-
ing poor people have ample opportunities for mobility.
Accomplishing these goals won’t be easy, especially at a
time when city and state resources are severely limited
because of the fiscal crisis. And clearly, local policymak-
ers will need significant help from the Obama adminis-
tration and Congress, particularly in addressing the high
cost of health care and electricity, barriers in access to
higher education and the shortage of affordable housing.
But the turnaround must begin with local action, and city
officials have a number of concrete steps to take.

Rather than providing a point-by-point action

plan, we have set forth several basic principles that
should drive policy decisions. They include:

Diversify the economy, with a focus on creat-

ing middle-income jobs. The recent Wall Street melt-
down is only the latest in a long series of reminders that
New York City’s economy is dangerously over-depen-
dent on Wall Street. Although the Bloomberg admin-
istration has taken some steps to diversify the econo-
my, much more can and should be done. Any future
diversification strategy should include more robust city
support for entrepreneurs and freelancers, as well as a
stronger focus on maintaining and growing sectors that
provide large numbers of middle-income jobs—from

REASON FOR OPTIMISM

This isn’t the first time in New York City’s history that middle class individuals and families have had the distinct feeling that they are on
an endangered species list.

As far back as 1907, the New York Times proclaimed: “Very soon New York will be a city without citizens, expense of living and

noisy surroundings are driving people out to the suburbs.”

103

In the late 1960s, the federal Bureau of Labor Statistics found that it cost

more to be middle class in New York City than in any large city in the country other than Honolulu. In the early 1970s, middle class
housing prices in New York were 26 percent higher than the nation’s urban average, at a time when middle class concerns also included
rising crime and failing education.

104

New York seems to have gone through several evolutions where out-migration was more pronounced—as in the 1950s and

1960s—and then less so, as over the last two decades when immigrants and young people arrived in larger numbers than the resi-
dents—mostly families— who left. New York’s reputation among its residents has improved as well: we found that many of the people
who moved to the city want to remain here, as long as they can afford it. As recently as 1990, roughly six in ten New Yorkers told survey-
ors that they would live somewhere else if they could.

105

More recent polls suggest that such negativity is less prevalent today; even in the

relatively rough economic times in the early 2000s, no more than a third to two-fifths of New Yorkers were thinking of moving out.

106

An internal study conducted in 2006 for the city by Harris Interactive which surveyed people who had recently moved out of New

York City found that even those who left had considerably more positive views about the city than people in the same situation who were
surveyed in 1993. According to the “NYC Movers” study, almost three in five (59 percent) people said they were glad to leave the city
in 1993 while 39 percent would have preferred to stay. In 2006, the numbers were reversed: over two-thirds (68 percent) said they
would have kept living in New York if not for the reason they gave, while only one quarter (27 percent) said they would have moved
anyway.

107

The negative effects of gentrification and rampant housing speculation might merit significant concern, but these trends are prefer-

able to the “dark and apocalyptic” New York of the 1970s, when crime, graffiti and general disorder were driving businesses and
families out of the city.

108

Indeed, the social successes of the past decade, particularly the reduction of crime, should be seen as a linchpin

of a renewal for the city’s middle class.

Much of our optimism centers not on things such as the glitzier improvements in Midtown Manhattan, but about the resurgence of

neighborhoods in the outer boroughs that can accommodate middle class families. In previous decades, residents of the outer boroughs
had good reason to suspect they were being ignored by the city administration—the 1969 snow emergency of the Lindsay era, when
Queens’ streets were left unplowed for four days and 26 residents died, being perhaps the most notorious example.

109

Yet since then there has been a growing trend among some urban observers to see the outer boroughs as holding the key to the

city’s fate. These areas have the space and the relatively lower rents to attract and retain the upwardly mobile middle and working class.
The movement of young professionals and families to these areas is a hopeful sign; if these residents stay long enough, they could force
a welcome shift of city attention and resources to the outer boroughs.

the city’s ports and port-related warehousing sector to
niche manufacturing, educational services and green
collar industries. Additionally, City Hall should bolster
workforce development efforts to get more young peo-
ple prepared for fields that pay middle-income salaries
and are expected to grow—including legal secretaries
and paralegals, pest control workers and technician
positions in health care and the sciences.

Embrace community colleges as engines of

mobility. In today’s economy, individuals without at
least  a  two-year  college  degree  face  overwhelming
odds  against  attaining  jobs  that  pay  middle-income
wages  and  provide  a  path  to  upward  mobility.  New
York  has  several  high-caliber  community  colleges,

but too many of their students don’t qualify for state or
federal tuition assistance and city officials have long
treated these institutions as a stepchild of the edu-
cation system, failing to provide them with adequate
resources to hire enough full-time faculty or address
significant infrastructure deficiencies.

Preserve existing middle-income housing and

ensure that more of the new residential develop-
ment is geared to middle-income residents. The
sale of Manhattan’s Stuyvesant Town development in
2006 is the most high-profile example of how middle
class housing has disappeared in New York City. Re-
cent studies show that New York lost 27 percent of its
subsidized housing between 1990 and 2006, and is in
danger of losing a large chunk of what’s left as build-
ings developed under the Mitchell-Lama program re-
vert to market rates.

110

At the same time, very little of

the new housing developed across the city in recent
years has been geared towards people earning middle-
income salaries; most of the developments are aimed at
the high and low ends of the market. City and state of-

ficials must make a stronger commitment to preserving
what’s left of the city’s affordable housing and address
the barriers to building new middle class housing.

Go back to the basics, by improving the sub-

ways, schools and upgrading critical infrastruc-
ture. As the city economy boomed over the last doz-
en years, city leaders expended a large chunk of New
York’s economic development and planning resourc-
es on costly sports stadiums and glitzy developments
like Atlantic Yards, Governor’s Island and the new
Penn Station—projects that garner headlines and fa-
cilitate huge private profits, but do little to shore up
the basic building blocks of life in the five boroughs.
The opportunity cost came in investments not made

to  increase  the  frequency  of  subway  service,  create
new express bus and ferry routes and renovate criti-
cal  infrastructure—projects  that  would  help  reduce
commuting times and improve New Yorkers’ quality
of life. Local officials must now make it a priority to
undertake  these  infrastructure  projects,  while  con-
tinuing ongoing efforts to improve public schools and
reduce crime.

Pay closer attention to the boroughs outside

of  Manhattan. Brooklyn, Queens, Staten Island and
the Bronx have long been safe havens for the middle
class.  But  their  importance  has  become  even  great-
er  after  a  decade  of  sharply  rising  real  estate  prices
has  rendered  Manhattan  unaffordable  to  all  but  the
wealthy. However, the boroughs do not always get the
attention and resources they deserve from City Hall.
For the most part, the neighborhoods outside of Man-
hattan  require  attention  to  fundamentals  like  trans-
portation, public safety, education and sanitation and
a  stronger  commitment  to  preventing  development
that is out of scale or character with neighborhoods.

Over the last dozen years, city leaders expended a large chunk of New York’s
economic development and planning resources on costly sports stadiums and
glitzy developments—projects that garner headlines, but do little to shore up
the basic building blocks of life in the five boroughs. The opportunity cost came
in investments not made to infrastructure projects that would help improve
New Yorkers’ quality of life.

A PLATFORM FOR MOBILITY

Though neglected and under-funded by local officials, community colleges play a vital role in
boosting New Yorkers into the middle class

For  much  of  the  20th  century,  New  York  City  pro-
vided  unparalleled  opportunity  for  individuals  from
modest backgrounds to rise up into the middle class.
Longtime residents with limited education and new-
comers with poor English skills could get ahead here
thanks  to  an  economy  that  produced  hundreds  of
thousands of blue collar jobs in sectors from the rag
trade to the ports. But with the city’s industrial sector
now only a skeleton of its former self, higher educa-
tion has become the single most important ticket to
the middle class.

In today’s information age, a college education

has  become  the  minimum  requirement  for  a  sig-
nificant share of the jobs in the city that pay mid-
dle-income  wages  and  provide  a  path  to  upward
mobility. Several blue collar fields now require at
least  some  college  coursework,  while  most  of  the
middle  class  job  titles  that  are  projected  to  grow
in the years ahead—from nurses to legal secretar-
ies—also require either a two- or four-year college
degree. Further, the payoff for those with a college
degree is greater now than ever before. Individuals
who have graduated from college now earn 76 per-
cent  more  than  those  with  only  a  high  school  di-
ploma—up from 36 percent more in the 1970s—and
are far more likely to hold jobs that provide health
insurance.

111

While four-year colleges and universities gen-

erally  open  more  doors  than  two-year  institu-
tions,  community  colleges  arguably  play  an  equal
or  greater  role  in  elevating  New  Yorkers  into  the
middle class.

For tens of thousands of low-income residents

and immigrants, New York’s community colleges are
the  only  entry  point  into  the  higher  education  sys-
tem. Many of these individuals don’t have the grades,
money,  language  skills  or  connections  to  attend  a
four-year  institution.  For  others,  four-year  colleges

simply don’t offer the flexibility they need to take
classes while maintaining a full-time job to support
themselves and their family.

By themselves, community colleges provide

meaningful economic advantages: Individuals with
an associate’s degree earn $10,000 a year more than
those with only a high school diploma or GED.

112

They also give countless New Yorkers who otherwise
wouldn’t be able to qualify for or immediately afford
a  four-year  institution  the  chance  to  do  so.  Indeed,
68  percent  of  community  college  graduates  in  New
York  transfer  to  four-year  institutions.

113

Addition-

ally, community colleges enroll thousands of adults
who have been in the workforce but need to obtain
new skills, either to keep pace with technological ad-
vancements in their industry or to position them for
an entirely different career.

“Community colleges are real gateways to op-

portunity,”  says  Regina  Peruggi,  president  of
Sheepshead  Bay-based  Kingsborough  Community
College,  one  of  six  community  colleges  in  the  five
boroughs that are part of the City University of New
York  (CUNY).  “You  definitely  need  higher  educa-
tion to compete in today’s economy. Years ago, peo-
ple would compete with a high school diploma. But
today, continued training after high school is almost
a necessity.”

Economic data supports this argument. Accord-

ing  to  the  U.S.  Bureau  of  Labor  Statistics,  half  of
all  jobs  nationwide  that  are  expected  to  grow  most
significantly in the years ahead will require at least
some  postsecondary  education,  and  the  training  for
60 percent of those jobs can be handled exclusively
by community colleges.

114

An associate’s or bachelor’s

degree will be even more essential for jobs that pay
middle-income wages—particularly in New York.
“This is a city that rewards education,” says James
Brown, a labor market analyst for the New York State

Department of Labor. “Overall, it’s increasingly clear
that you need more than a high school education to
make good salaries.”

Brown says that many of the new, decent-paying

jobs  specifically  require  an  associate’s  degree.  And
for  a  number  of  other  positions  that  do  not  require
college, a degree from a community college gives ap-
plicants  a  leg  up  over  those  who  only  have  a  high
school diploma. “If you’re an employer and six [ap-
plicants]  have  an  associate’s  degree  and  four  have
only  a  high  school  diploma,  you  might  cut  out  the
people that only have a high school diploma. It be-
comes a way of screening, even if it doesn’t say so in
the ad,” says Brown.

“A nice chunk of the workforce falls into the edu-

cation  category  of  ‘some  college,’”  he  says—perhaps
not  even  a  two-year  degree,  but  indicative  of  time
spent in a college classroom. “You don’t need a four
year college degree. You do, however, need significant
training  beyond  high  school,”  Brown  says.  “For  in-
stance, legal secretaries make quite good money and
[the  field  is]  growing  well.  You  don’t  need  a  college
degree to be a legal secretary, but you’ll find that col-
lege degrees are becoming more common.”

Community colleges are already a key part of the

education  system  both  nationally  and  in  New  York.
Today,  community  colleges  enroll  46  percent  of  all
undergraduates  in  the  United  States,  including  55
percent  of  Hispanics,  47  percent  of  African-Ameri-

cans and 47 percent of Asians.

115

In the five boroughs,

81,518 students were enrolled in community colleges
in the fall of 2008.

116

There’s little question that these institutions

need more help. Graduation rates at community col-
leges, both in New York and around the nation, are
woefully low. Nationally, only about one out of every
five  students  at  two-year  institutions  graduates  in
two years. In a 2007 interview with the Center for an
Urban Future, CUNY Chancellor Matthew Goldstein
said that this was likely the reason that community
colleges  haven’t  been  embraced  by  policymakers.
“This is a serious issue that pushes some people away
from community colleges,” said Goldstein. “There are
legitimate  reasons  for  this.  Many  students  come  in
very poorly prepared, so we have to remediate them
with  work  that  is  not  college  work.  That  can  take  a
year or a year and a half. Also, the students are of-
ten poor. Many have to work while they are going to
school, and that’s a serious issue. And [the commu-
nity  colleges]  are  not  well-funded,  so  we  can’t  give
a  wide  spectrum  of  courses  over  a  wide  number  of
hours during the day. You put all that stuff together
and it adds up.”

Unfortunately, policymakers here and in Wash-

ington have shown little understanding of the critical
role these institutions now play in the city’s economy,
much less as vehicles for mobility. In New York, as in
many other cities, community colleges are overshad-

$60,000

$50,000

$40,000

$30,000

$20,000

$10,000

A TICKET TO THE MIDDLE CLASS

Individuals with an associate’s degree earn 38 percent more than high school graduates

Source: Average Personal Income of Population Age 25-64 by Level of Education Completed, 2005 -- National Commission on Adult Literacy

$27,367

l I

High School Graduate

Some college,

Associate’s degree

Bachelor’s degree

or GED

no degree

$34,644

$37,716

$54,532

owed by virtually every other facet of the education
system; they have not received the financial support
needed to effectively educate students that come from
a wide variety of backgrounds and often require aca-
demic remediation.

The need is becoming more acute as more New

Yorkers look toward college campuses for advance-
ment. Community college enrollment in the city has
increased by 22 percent over the past 10 years—from
62,540 in 1999 to 76,018 in 2008—but total funding, ad-
justed for inflation, has risen by just five percent over
the same period.

117

“Funding is not keeping pace with

needs,” says Carolyn Williams, president of Bronx Com-
munity College (BCC). “[Higher] education has been
truly underfunded in the state for the last 15 years.”

Williams says that when she first assumed the

position  at  BCC,  she  was  surprised  that  community
colleges  were  largely  viewed  in  a  negative  light  by
policymakers and the public. This was not the case in
her two previous stints running community colleges,
in Michigan and California. “There was a respect for
community  colleges”  in  those  places,  says  Williams.
“In New York, it’s totally different.”

According to several education experts, limited

public support for community colleges has resulted in
a system with serious unmet infrastructure needs, too
few full-time professors and outdated equipment that
is often unable to prepare students for the technologi-
cal needs of today’s economy. It also has constrained
CUNY’s ability to keep tuition low. Indeed, while the
CUNY community colleges across the five boroughs
have open admissions policies, they are not necessari-
ly affordable to all New Yorkers. Even the least expen-
sive of the six institutions—$3,104 at Bronx Community
College to cover annual tuition charges and fees—runs
almost a third more than the national average ($2,361)
for public two-year colleges and higher than all of New
York’s peer states (California, Florida, Illinois, Massa-
chusetts, Ohio, Pennsylvania, and Texas).

118

By con-

trast, tuition and fees for a full-time community col-
lege student in Los Angeles averages just $600.

119

As individual costs have risen, state and federal

public tuition assistance has not kept up. Today, many
of  those  attending  community  colleges  don’t  qualify
for  state  and  federal  aid  programs.  Numerous  mid-
dle  class  students  and  their  families  earn  too  much
to qualify for the state’s Tuition Assistance Program
(TAP)  but  too  little  to  afford  the  cost  of  tuition  and

fees. Additionally, TAP doesn’t take into account the
fact  that  a  large  number  of  community  college  stu-
dents spend a year or more taking remedial courses
before  their  college-level  classes  even  begin.  The
grants typically expire when many students are only
part  of  the  way  to  their  degree.  “Many  students  are
either denied TAP, exhaust their TAP prematurely or
are forced to take more credits than they should really
take, simply to qualify for financial aid, often without
good academic results for the students,” says Lenore
Beaky, a professor at LaGuardia Community College
in Long Island City.

120

City Hall could also be doing far more to support

community colleges. In fact, the city has been the main
impediment  to  dealing  with  the  overwhelming  infra-
structure and maintenance needs at New York’s com-
munity colleges. Unlike CUNY’s senior colleges, whose
capital needs are exclusively paid for by the state, con-
struction work at community colleges requires the city
to  match  state  funding.  During  the  Giuliani  adminis-
tration, this contribution rarely materialized. It has im-
proved during the Bloomberg administration, but not
enough.  In  2008,  for  instance,  the  governor  allocated
$1.4  billion  to  fund  the  critical  maintenance  needs
identified  for  CUNY’s  senior  colleges.  But  CUNY  re-
ceived no similar infrastructure funding for community
colleges  because  state  officials  did  not  feel  confident
that the city would match its contribution.

“There is a growing gap in our ability to expand

classroom and programmatic space and improve con-
ditions of the senior colleges, which are state funded,
and our ability to provide the same for the community
colleges and Medgar Evers [College], which are jointly
funded by the state and the city,” said Iris Weinshall,
CUNY’s  vice  chancellor  for  facilities  planning,  con-
struction  and  management  (and  a  former  city  com-
missioner  under  Mayor  Bloomberg),  at  a  February
2008 City Council hearing. “And that is due to the in-
consistent manner with which CUNY receives fund-
ing from the city.”

121

To its credit, the Bloomberg administration re-

cently provided $19.5 million to help CUNY develop a
pilot program to help improve graduation rates among
its community college student, known as the Accel-
erated Study in Associate Programs, or ASAP. At the
same time, however, both the city and the state have
reduced financial support for CUNY in their most re-
cent budgets.

Any strategy to retain and expand the city’s middle class
must focus on increasing opportunities for economic
mobility for a wide spectrum of New Yorkers. For local
policymakers, this means not only advancing initiatives
that enable more city residents to access higher educa-
tion and skills training programs, but also focusing eco-
nomic development resources on creating and preserv-
ing jobs in sectors that pay middle-income wages.

It is important to understand that New York City’s

future middle class will be different from its past mod-
el. We cannot simply turn back the clock to the days
when the city was home to more than a million indus-
trial jobs, many of which paid wages high enough to
allow workers with limited educational backgrounds
to live a middle class life. Most of those jobs are gone
for good, not just from the five boroughs, but from
the United States. And in today’s highly competitive
global economy, the advantage for high-cost cities
like New York lies in information, creativity and de-
sign—not the production and distribution of goods.

That said, the city’s economic development officials

could do a far better job of nurturing industries that
will create new middle skill jobs; preserving existing
manufacturers; helping new entrepreneurs—includ-
ing the large numbers of immigrant-owned firms—ex-
pand beyond the mom-and-pop stage; and developing
career pathways for young people in occupations that
pay middle-income salaries and are expected to grow.

To his credit, Mayor Bloomberg has long ac-

knowledged the city’s unhealthy reliance on Wall
Street and advanced policies to diversify New York’s
economy. The most visible components of this strate-
gy has been the administration’s efforts to expand the
city’s bioscience, film and tourism sectors, but it has
also taken some steps to support the growth of New
York City’s maritime port. Yet, city economic devel-
opment officials have done little to focus on several
other sectors that could create a significant number

of middle-income jobs in New York, such as ware-
housing, air cargo and green manufacturing. On bal-
ance, the mayor and his top aides have talked a better
game than they’ve played.

One opportunity lies with warehousing jobs con-

nected  to  the  New  York  Harbor’s  fast-growing  con-
tainer  port.  According  to  the  New  York  Shipping
Association,  employment  in  the  region’s  wholesal-
ing/warehousing industry grew by 42 percent between
2000 and 2004, from 55,000 to 78,000 jobs.

122

Many of

these jobs were created adjacent to the container ter-
minals in Northern New Jersey, where the explosive
growth in cargo shipments led to the development of
warehousing centers that optimize just-in-time sup-
ply chain principles. Industry experts suggest that this
type of port-related warehousing will continue to grow
in the years ahead. The Port Authority forecasts the
demand for warehouse space in the New York/New
Jersey port area to be eight million square feet by 2060,
nearly three times the amount that existed in 1999.

123

Thus far, New York City has captured relatively few

of these jobs. But as New Jersey’s options dwindle for
developing new warehouses in close proximity to the
port, Staten Island could reap the benefits. There is a
vast amount of undeveloped space in close proximity
to the Staten Island-based New York Container Termi-
nal, one of the region’s fastest growing port facilities in
recent years. Terminal operators recently renovated a
212,000 square foot warehouse just outside the facility’s
gates. Also nearby is the 677-acre site where the Inter-
national Speedway Corporation hoped to build a NAS-
CAR track before local officials killed the plan in 2006.

Green collar jobs could be another source of mid-

dle-income job growth. Mounting support for new
environmentally-friendly policies aimed at reducing
carbon emissions has already prompted a number of
New York-based developers to erect Leadership in
Energy and Environmental Design (LEED)-certified

A NEW ECONOMY FOR NEW YORK

City officials must diversify the local economy and groom industries that offer potential to
create middle-income jobs

buildings that require locally-made building materials
and other furnishings. As this trend accelerates, new
demand is anticipated for locally-made building sup-
plies. Brooklyn-based IceStone, which makes counter
tops using recycled materials, is one of the early pio-
neers of this movement. “I believe that this is the fu-
ture of manufacturing and a source of high-wage jobs
for the middle class,” says Adam Friedman, executive
director of the New York Industrial Retention Net-
work, a nonprofit that advocates on behalf of manu-
facturers in the five boroughs. “It’s different from the
old manufacturing and it has a great future.”

Another possible avenue to create middle-skill jobs

is a large-scale effort to retrofit existing apartment tow-
ers  and  office  buildings  in  New  York  with  solar  pan-
els  and  other  energy-efficient  upgrades—an  initiative
championed  by  environmental  leaders  and  policymak-
ers. Indeed, President Obama has expressed support for
including billions of dollars in the federal stimulus pack-

age for such an initiative. This undertaking, which would
reduce energy consumption and save owners money,
would require thousands of construction-related jobs. In
his January 2009 State of the City address, Mayor Bloom-
berg gave an indication that city policy might lend a hand
in this effort. Bloomberg announced plans to “green” the
city’s Building Code, including a requirement that exist-
ing private sector buildings improve their energy effi-
ciency, and to create green jobs by investing $900 million
over the next nine years to retrofit city schools, hospitals
and other buildings with new energy systems.

Beyond grooming industries with growth potential,

the city should also do more to support small and mid-
sized  industrial  businesses  around  the  five  boroughs
that have a strong rationale for remaining in the New
York  region.  While  globalization  and  the  city’s  high
cost of doing business have caused countless industrial
firms to relocate to cheaper locales or go out of busi-
ness,  most  of  the  city’s  remaining  manufacturing  are

anchored to this region because their competitive ad-
vantage  is  being  close  to  their  customer  base.  Scores
of  them—from  ethnic  food  producers  to  the  makers
of  home  furnishings—have  real  potential  for  growth.
However, many of these firms are being squeezed out
by rising real estate prices and city zoning policies that
have  facilitated  the  conversion  of  longtime  industrial
areas  to  residential  development.  More  than  a  few
firms have simply relocated to the surrounding region,
meaning that the city is losing blue collar jobs not just
to China, but to New Jersey and Westchester.

The Bloomberg administration admirably created

an office to support manufacturing businesses and es-
tablished 16 Industrial Business Zones, districts that
the mayor promised would be off limits to new attempts
to convert manufacturing land into other uses. But de-
spite these positive efforts, Bloomberg’s two terms have
seen a steady erosion in the number of properties that
are zoned for manufacturing and a precipitous increase

in real estate prices for industrial buildings in neigh-
borhoods from Long Island City to Sunset Park. The
preservation of manufacturing companies undeniably
has been a low priority for the administration.

On another front, city economic development offi-

cials should devise a new set of strategies to help entre-
preneurs start and grow businesses in New York. With
blue collar jobs on the decline, entrepreneurship has be-
come an increasingly important route to the middle class
for immigrants and other New Yorkers who lack the edu-
cational background or language skills to get living wage
jobs with existing businesses. As the Center documented
in its 2007 “A World of Opportunity” report, the city has
already experienced an explosion of new businesses in
recent years, with many of the new firms being started by
recent immigrants.

124

But most entrepreneurs here face

daunting obstacles just to survive, from the high cost of
real estate and insurance to overzealous enforcement ef-
forts by the city’s regulatory agencies.

Labor economists already know which occupations in New York have been adding
jobs that offer middle-income salaries and don’t necessarily require a bachelor’s
degree. They include legal secretaries, dental hygienists, nurses, cable installers,
auto and transit mechanics, pest control specialists, occupational therapy assis-
tants, chefs, construction managers and a range of service technicians.

Without help in getting over these barriers, too few

of the city’s entrepreneurs end up expanding beyond the
mom-and-pop stage, resulting in countless missed op-
portunities for new jobs. For instance, of the 15 cities in
the U.S. that have the most Hispanic-owned businesses,
New York has the lowest average receipts per firm. The
average Hispanic-owned company in the five boroughs
earned just 37 percent as much as a Hispanic-owned firm
in Houston, 40 percent of the average in Chicago and 42
percent of the average in Miami. Similarly, New York
City’s Asian-owned businesses took in a smaller amount
of receipts, on average, than their counterparts in 13 of
the 15 cities with the most Asian-owned firms. The aver-
age Asian-owned firm in New York earned 48 percent as
much as a similar firm in Los Angeles, 57 percent of one
in Houston and 71 percent of one in San Francisco.

125

Finally, the city ought to be more aggressive in

promoting  career  pathways  that  lead  to  mobility  for
New  York’s  poor  and  working  poor—and  develop-
ing training programs that help local residents access
these positions. Labor economists already know which
occupations in New York have been adding jobs that
offer  middle-income  salaries  and  don’t  necessarily
require a bachelor’s degree. They include legal secre-
taries, dental hygienists, nurses, cable installers, auto
and transit mechanics, pest control specialists, occu-
pational therapy assistants, chefs, construction man-
agers and a range of service technicians.

In several of these cases, workforce development

programs  run  by  city  agencies  or  nonprofit  groups
are targeting these opportunities and gearing training
programs  accordingly.  Many  others,  however,  have
gone unaddressed. James Brown, a labor market ana-
lyst for the New York State Department of Labor, says
that  some  of  the  growing  occupations  that  pay  mid-
range salaries have not yet become a major focus of
local workforce development providers.

Take pest control. The growth of the city’s popula-

tion in recent years has led to a demand for pest con-
trol specialists, jobs that pay in the $30,000 to $40,000
range.  “You’d  think  pest  control  would  be  obvious,”
says  Brown.  “It’s  growing,  and  it’s  not  small.  When
I  look  at  various  training  programs  that  are  offered,
through the WIB (Workforce Investment Board), there
are  actually  relatively  few  for  pest  control  and  most
of  the  ones  that  [do  exist]  aren’t  in  New  York  City.
I found four programs and most were in the Hudson
Valley. It didn’t make particular sense.”

Brown sees the same missed opportunities in some

of the occupations that involve repairing or installing
technological equipment, from personal computers to
fiber optic networks. “A lot of them have to do with
repairing or servicing things,” says Brown. “No one is
advertising about these jobs in subways. You never
see them on TV, but they’re there and are growing.”
And, he adds, they can’t easily be outsourced.

Finally, although it will never recover its past

scale or importance as a source of employment, what
remains of New York’s manufacturing sector still can
provide upward mobility. As manufacturing employ-
ment  has  dropped,  the  percentage  of  industrial  jobs
that  require  high  skills—and  pay  accordingly—has
continued to grow. In many parts of the country, short-
ages  of  skilled  workers  such  as  machinists,  welders
and tool and die makers have become quite severe.

126

Retaining such industries could have an impor-

tance  that  is  disproportionate  to  the  number  of  jobs
directly  saved.  According  to  an  analysis  of  Census
data by University of Washington geographer Richard
Morrill, there is a direct correlation to the concentra-
tion of manufacturing jobs and the level of inequality.
Areas more reliant on government, business services
and  other  services  tend  to  have  greater  inequality;
those that have attracted, or retained, industry, such
as in the Great Plains and parts of the Southeast, have
actually seen inequality decline.

127

Proof that opportunity persists is offered by the

chronic complaints of industrial employers that they re-
main short of skilled workers. More than 80 percent of
the 800 U.S. manufacturing firms surveyed in 2005 by
the National Association of Manufacturers, the Manu-
facturing Institute, and Deloitte Consulting reported that
they were “experiencing a shortage of qualified workers
overall.” Nine in 10 firms stated that they faced a “mod-
erate-to-severe shortfall” of qualified technicians.

128

After decades in which high costs pushed indus-

trial jobs out of New York City, a new market dynamic
could provide a local boost to emerging industries
such as creating green construction products and or-
ganic or ethnic food production; as energy costs rise,
firms choose to locate close to the markets they serve
whenever possible.

129

City action to ensure sufficient

and affordable industrial space, and to facilitate the
training and placement of workers in these new fields,
will be vital in creating a new area of opportunity for
middle-class New Yorkers.

IF YOU BUILD IT...

New York desperately needs more housing for the middle class, yet almost all of the new
housing being built in the five boroughs has been aimed at the luxury market or the poor

On  September  15,  2008,  the  day  Lehman  Brothers
failed  and  the  credit  markets  seized  up,  New  York
City’s  biggest  residential  construction  boom  since
1965  came  to  an  official  and  irrefutable  end.  Since
then more than $5 billion of new construction in the
city  has  come  to  a  screeching  halt.  Yet,  despite  the
conventional  assumption  that  more  supply  means
less  demand  and  lower  prices,  the  historic  building
boom that spanned most of Mayor Bloomberg’s first
two  terms  in  office  produced  a  surprisingly  small
number  of  new  units  geared  towards  middle  class
families and professionals.

Mark Alexander, a veteran developer of both af-

fordable and market-rate housing in the city, suggests
that only the extremes of the housing market are viable
in New York. “There’s virtually nothing in the middle,”
he laments. Similarly, when we asked Jason Muss, a
housing developer in Brooklyn and Queens, whether
there was a middle class housing gap in the city, he re-
sponded: “If you’re talking about the sales market and
you’re looking at units priced in the $400,000 to $700,000
range, then yes, of course there’s a gap. There’s a big
gap. It’s hard to produce housing at that price.”

City, state and federal housing subsidies go almost

exclusively to families who earn less than $56,000 a
year. For instance, of the approximately 64,000 units
developed  so  far  under  Mayor  Bloomberg’s  ambi-
tious affordable housing plan, 75 percent have gone
to  the  city’s  lowest  income  residents.  Between  2004
and  2007,  the  city  spent  $1.12  billion  of  the  capital
budget on building and preserving units for families
who earn $56,720 per year or less, but only $87 mil-
lion  on  units  for  families  making  more  than  that.

130

Meanwhile, on the other end of the spectrum, luxury
condo and co-op sales experienced unprecedented
growth in the same period.

Of course, few policy experts would recommend

redirecting already scarce public funds away from

low-income  New  Yorkers  in  order  to  finance  more
middle class developments, but the tradeoff from that
decision  exacerbates  the  city’s  middle  class  hous-
ing plight. Another issue is the apparent disconnect
between  what  many  middle  class  families  want  in
a  home  and  what  developers  feel  they  can  provide,
given  the  space  and  cost  constraints  of  building  in
New  York  City.  For  example,  Alexander  observes
that  the  traditionally  cheap-to-develop,  single-fam-
ily housing common to suburban communities is not
really an option in many places throughout the five
boroughs. Land values are too high and the need for
denser communities too great to make that style eco-
nomical or, from a planning standpoint, desirable for
New  York.  Similarly,  one  developer  told  us  matter-
of-factly that he couldn’t justify building apartments
with more than two bedrooms, despite acknowledg-
ing the pent-up demand among middle class families
for more space. He said all the money is in studios,
which  command  a  higher  rental  or  purchase  price
per square foot.

Another important facet is the near-Byzantine

system of government subsides and tax incentives
designed to stimulate both market rate and afford-
able  housing  construction  in  the  city.  Some  ex-
perts we spoke with worry that the new affordable
housing stipulations to the state’s 421a tax abate-
ment  program,  revised  by  the  legislature  in  2007,
will block development in neighborhoods like the
South  Bronx,  which  traditionally  lag  behind  in
housing construction. This is just one among many
entrenched difficulties with the current system of
incentives  across  different  levels  of  government,
starting with how the federal Department of Hous-
ing  and  Urban  Development  calculates  its  target
income brackets.

Ultimately, however, every complicating factor

that contributes to New York’s middle class housing

shortage leads back to the cost of construction inside
the city limits. This always-vexing problem is getting
worse: according to a 2008 report by the New York
Building Congress, construction costs in the city rose
32 percent between 2004 and 2007; over the past 35
years, costs have increased 400 percent. As a result,
it is now 60 percent more expensive to build in New
York than in Dallas, 50 percent more than in Atlanta
and 20 percent more than in Los Angeles.

131

One rea-

son for such high costs of course is high land values;
another is the city’s building code, which, for exam-
ple, outlaws in new buildings the once ubiquitous ex-
ternal fire escape, requiring more expensive internal
arrangements.

Another big cause, says Randy Lee, chairman of

the Building Association of New York City, is the bu-
reaucratic red tape. “You can file a project with [the
Department of] City Planning and wait a year before
you get the building passed,” Lee says. “A sewage
change will take you two years. The bureaucratic en-
vironment is really hostile in New York.”

This wasn’t always the case. New York has a

proud history of middle class housing developments.
As  early  as  1909,  innovative  real  estate  companies
were  developing  huge  swaths  of  Queens  for  two-
and three-family homes. In Sunnyside Gardens and
Forest  Hills  Gardens,  rows  of  attached  three  story
cottages  were  built  around  larger  apartment  build-
ings and greenswards in order to create both density

and a sense of suburban detachment; many houses
included two or three distinct units, enabling home-
buyers to recoup some of their investment by rent-
ing out the extra space. As it happens, the city’s De-
partment of Housing Preservation and Development
sponsored  a  similar  kind  of  development  in  2001
in  Far  Rockaway  called  Arverne-by-the-Sea,  and
Mayor  Bloomberg’s  office  is  now  pushing  hard  for
two  more  just  like  it—another  one  on  the  beach  in
Arverne and one in Long Island City, just across the
East River from Manhattan.

Though these developments are all extremely

large,  requiring  big  land  grants,  property  tax  ex-
emptions and, in one case, even federal tax exempt
bonds,  the  early  results  from  Arverne-by-the-Sea
are decidedly mixed. The developers—Long Island-
based Beechwood Organization and Benjamin Com-
panies—initially  bragged  of  long  waiting  lists,  but
after starting out at a reasonable $350,000 price, the
houses quickly climbed to a minimum of $500,000. In
fact, despite a long commute (12 miles to Manhattan,
and  more  than  an  hour  by  subway)  and  a  location
near JFK airport, many of the houses were selling for
as much as $1 million—that is, at least until last fall’s
financial crisis. Only time will tell if the crisis will re-
lieve the upward pressure on home prices—and if so,
whether the city will retain enough middle class jobs
to  allow  prospective  homebuyers  to  take  advantage
of lower prices.

$1,200,000,000

$1,000,000,000

$800,000,000

$600,000,000

$400,000,000

$200,000,000

WHERE’S THE MIDDLE-INCOME HOUSING?

NYC Capital Funds Spent on Low-Income Housing and Middle-Income Housing, 2004-2007

Source: Figures are from New York City Department of Housing and Preservation’s 2006 Affordability Study and cover Fiscal Years 2004 to 2007.

$1.12 billion

Families making under $56,720

Families making over $56,720

$87 million

BOLSTERING THE BOROUGHS

With most Manhattan apartments out of reach, the other boroughs represent the best, and
perhaps only, hope of retaining the middle class

New York’s long-term future as a middle class city
cannot be secured simply by focusing on the ex-
pansion of what some urban experts call “the urban
glamour zone.”

132

Instead, economically and socially

viable urban centers outside Manhattan that can pro-
vide attractive locales for increasing share of people
who are thirty, forty or older need to be cultivated.

The good news is that New York City has much

to  build  on.  While  most  of  Manhattan  and  outer-
borough neighborhoods like Williamsburg, Brook-
lyn  Heights  and  Hunters  Point  have  gotten  out
of  reach  for  those  earning  modest  incomes,  large
swaths of Brooklyn, Queens, the Bronx and Staten
Island remain havens for the middle class. Neigh-
borhoods  from  Ozone  Park,  Queens  to  Mill  Basin,
Brooklyn  experienced  significant  growth  in  new
housing  development  during  the  past  decade,  in-
cluding  one-  and  two-family  homes  still  generally
affordable to middle class residents.

133

In fact, dur-

ing a good part of this decade the boroughs sur-
passed Manhattan as the primary locus of housing
construction in the city.

134

These areas have benefited, perhaps even more

than Manhattan, from the decentralization of polic-
ing activities and the reduction of crime.

135

In many

cases these districts have long stood out as resilient
communities that managed to resist the urban decay
of the 1970s and thrive in the decades since, while
remaining  affordable.  These  are  not  glamorous
neighborhoods  that  dominate  the  images  of  great
cities or receive large coverage in the global or na-
tional  media.  Often  these  might  be  considered  the
relatively  “plain  vanilla”  neighborhoods.  “Queens,”
observed writer Ian Frazier, “specializes in commu-
nities  nonresidents  have  heard  of  but  could  never
place on a map.”

136

Yet such communities, many with long histories

of middle class residence, provide a critical balance to

both the exclusive precincts of the ”luxury city” and
the most neglected neighborhoods. Such places need
to be the focus of modest ambitions, rather than the
grand projects usually celebrated by the media and
business groups. They represent the critical small
building blocks with which future great urban areas
can be built and nurtured.

Maintaining these neighborhoods will require

careful  application  of  public  policy.  In  many  cases,
people we interviewed in the outer boroughs were re-
sistant to some of the city’s plans for upzoning their
neighborhoods. Many suggested that it was the rela-
tive  lower  densities  that  made  these  places  attrac-
tive;  replacing  single  or  two  family  homes,  or  low-
rise  co-ops,  with  large  towers,  they  said,  would  not
encourage middle class people, particularly families,
to stay in the city. Notes Beth DeBetham, president
of the Local Development Corporation of Laurelton,
Springfield Gardens and Rosedale, all heavily middle
class  African  American  areas:  “What  we  see  is  that
the issue is not about race, black or white but about
squeezing the middle class. We like the trees and the
small town community. That’s what keeps the middle
class family here.”

These communities remain, as one Maspeth

resident put, “the last of the small towns of New
York.”

137

They are sustained not by the subsidies

that  developers  often  receive  for  mega-develop-
ments, but rather by attention to the fundamentals
of  transport,  public  safety,  education,  and  sanita-
tion—basics  of  urban  living  less  likely  to  compel
the interest of city officials than big-money, high-
profile projects.

Less excitement, however, does not mean less

value. In large part, residents of those less glitzy
outer-borough neighborhoods chose to stay in the
city because they found family friendliness and so-
cial cohesion. Nelson Ryland, a film editor with two

children  who  who  works  part-time  at  his  home  in
Ditmas Park suggests, “It’s easy to name the things
that attracted us: the neighbors, the moderate den-
sity. More than anything it’s the sense of the com-
munity.  That’s  the  great  thing  that  keeps  people
like us here.”

We believe that this “sense of community” will

become one of the keys to sustaining middle class
neighborhoods. The city as “entertainment machine”
will always exert a pull on the wealthy, and on young
people willing to trade day-to-day material comfort
for proximity to cultural excitement. But such places
in the longer term will inevitably lose those with lim-
ited resources, as well as those once-enchanted young
people as they start families and advance toward mid-
dle age.

138

Successful, sustainable urban places in the

21st century, just as in the 20th or 19th, will be those
that nurture people, families and businesses across
generations and life stages.

The sustainable city of the future will rely in large

part on the re-emergence of traditional institutions
that have faded in many of today’s cities. Churches and
other houses of worship—albeit often in reinvented
form—help maintain and nurture such communities.
Particularly among the poor and new immigrants, lo-
cal religious organizations have come forward to pick
up the slack. Many organizations that develop every-
thing from soup kitchens to AIDS hospices to low-cost
housing do so from bases in churches and other spiri-
tual institutions.

Similarly, extended family networks will be criti-

cal to future successful urban areas. As Queens resi-
dent and real estate agent Judy Markowitz puts it, “In
Manhattan, people with kids have nannies. In Queens,
we have grandparents.”

139

Such ties were certainly a consideration when Bay-

side native Jaime Bartolotta and her husband Angelo
recently moved from an apartment in Whitestone to a
new home they purchased for $735,000 not far from Citi
Field, the new home of the New York Mets. Her job at
Empire Erectors, a company that hangs signs through-
out the city, often requires assistance from grandpar-
ents to care for their two young children during the
day. “With kids you need space and a safe place,” she
explains. “And you need a community where you have
relatives, friends, people you can count on.”

If it wasn’t for this comfort zone, Ms. Bartolotta

might have moved out of the city entirely. Many of

her friends, she notes, have joined the middle class
mass migration to Arizona, Florida, Pennsylvania and
North Carolina. But she stayed because Whitestone
provides both a community and a sense of continuity
those other places could not.

“You see it all the time around here,” she ex-

plains.  “On Palm Sunday there’s a line outside the
church.  You  know  your  neighbors,  there’s  good
schools  and  little  crime—and  you  can  walk  to  an
express  bus  to  Manhattan  and  you’re  in  the  mid-
dle  of  it  in  half  an  hour.  But  best  of  all  are  the
people—everybody knows everybody. New people
move in but in that way the neighborhood doesn’t
change.”

140

In the coming decades, technology also can play a

contributing role to this community-building process.
Technology  can  help  networked  residents  stay  in
touch about what is happening in their communities;
this  is  particularly  critical  in  spread-out  areas  such
as  the  outer  boroughs  of  New  York.  Neighborhood
blogs, social networking sites and other tools can also
be critical to facilitating contact between artists in dif-
ferent  parts  of  the  city,  and  to  organize  and  inform
communities beyond the traditional mechanisms of-
fered  by  churches,  political  parties,  or  homeowner
associations.  Even  more  intimate,  localized  parents‘
sites allow families to inform each other about parks,
doctors and cultural events. “The churches and syna-
gogues are part of the network we reach out to, but
it’s  all  part  of  a  broader  effort  to  make  this  a  more
family-friendly  neighborhood,”  explains  Ellen  Mon-
cure  of  the  Flatbush  Family  Network.  “Without  the
network,  without  the  friends  and  the  connection,
we’d never stay. There’s an attempt in this neighbor-
hood to break down the city feel and to see this more
as a kind of a small town. It may be in the city, but it’s
a community unto itself, a place where you can stay
and raise your children.”

These “digital villages” offer a viable urban

option that has some of the characteristics of a clas-
sic suburb—small, cohesive and community-oriented
but still has the more distinctive urban virtues.

141

From

these  dense  networks  of  communities,  New  York’s
middle class can continue to grow and flourish in the
coming  decades.  They  can  represent  the  key  assets
in  helping  the  city  remain  vital  and  relevant  amidst
the challenges of the economic dispersion which will
dominate the coming era.

BACK TO THE BASICS

Instead of building stadiums and other glitzy developments, New York officials need to focus
on less glamorous tasks that would help improve everyday life for the middle class

New York City’s revival since the early 1990s came as
three  successive  mayors  made  commitments  and  set
policies  to  improve  New  Yorkers’  quality  of  life.  The
brilliance  of  this  campaign  lay  in  its  utter  simplic-
ity:  more  than  majestic  urban  renewal  projects,  what
the  city  really  needed  was  a  back-to-the-basics  focus
on  the  problems  that  negatively  impact  everyday  life
across  the  five  boroughs,  including  high  crime  rates
and  dirty  streets.  Among  the  results  were  a  surge  of
business activity and tourism revenue, as well as a gen-
eral rehabilitation of the city’s image at home, around
the country, and indeed across the world. When Mayor
Bloomberg took office in 2002, he pledged to consolidate
the achievements of his predecessors, but also smartly
expanded the quality of life campaign with his focus on
improving public schools and building new parks.

Investing in basic infrastructure improvements

and  improving  the  regulatory  environment  are  the
logical next steps in the city’s quest to make the city
more livable and ease some of the biggest causes of
daily frustration for middle class New Yorkers. Prior-
ities should include increasing the frequency of ser-
vice on overburdened subway and bus lines outside
of Manhattan, improving the inferior road system in
places  like  Staten  Island  and  the  Springfield  Gar-
dens section of Queens, upgrading the telecommuni-
cations  infrastructure  in  parts  of  Brooklyn  that  still
sometimes lose service in bad weather, and reducing
the costly burden of overzealous regulatory enforce-
ment agents on residents and businesses.

Unfortunately, city and state officials have squan-

dered  opportunities  in  recent  years  to  address  these
issues in favor of a succession of high-profile devel-
opment  projects  from  the  construction  of  three  new
sports stadiums (four, including the failed attempt to
build a new facility for the Jets) and expansion of the
Jacob  K.  Javits  Convention  Center  to  the  redevelop-
ment of Penn Station and rehabbing of Governor ‘s Is-

land. In total, these projects would cost taxpayers bil-
lions of dollars in subsidies while providing minimal
benefits to the average middle class resident.

Indeed, despite the staggering rise in tax collections

generated by the stock market and real estate transac-
tions over the past decade, city and state officials did
little to upgrade critical infrastructure. City Comptroller
William Thompson estimated that actual infrastructure
spending levels in the late 1990s and early 2000s were
barely half of what was required to maintain the city’s
streets, main roads, and railways in “a systematic state
of good repair.” As a result, key transportation linkages
in America’s biggest city are frequently shut down after
heavy rains due to flooding caused by poor drainage.
Brownouts and blackouts have become common dur-
ing summer high-use periods, caused in part by chron-
ic underinvestment in energy infrastructure.

142

Many of those interviewed for this report com-

plained that city has failed to provide the infrastruc-
ture—schools, transit service, and sanitation—need-
ed to keep pace with the rapid development that has
occurred in communities across the five boroughs. A
2008  report  by  the  City  Comptroller  found  that  the
city “is failing to build enough new schools to accom-
modate children in many neighborhoods experienc-
ing residential construction booms.” According to the
study, the city’s school construction plan includes no
new seats for the Queens West area of Long Island
City even though at least 3,330 units of housing were
completed in the area since 2005 and the one public
school there has already been operating at capacity,
with  space  for  just  237  students.  Similarly,  the  city
capital plan includes no new school seats in College
Point  and  Whitestone  even  though  the  six  elemen-
tary schools there were vastly over capacity; in four
schools, students were being taught in trailers.

143

It’s not just school construction that’s failed to

keep up with demand. On Staten Island, which grew

faster than any county in the state during the 1990s,
mounting traffic congestion has become the single
biggest headache for those living in the borough. The
haphazard nature of much of the recent development
has exacerbated this concern. But the traffic problems
also stem from that fact that much of the road network
dates back to the 19th century: some of the most heav-
ily-traveled roads—including Forest Avenue, Victory
Boulevard and Richmond Road—are only one lane
wide in each direction for long stretches.

144

Many Stat-

en Islanders believe that public officials have failed to
adequately address their transportation woes.

Particularly galling is the failure of city and state

officials to help the MTA find the resources to increase
subway and bus service, especially in fast-growing
communities outside of Manhattan.

Even before the MTA’s recent announcement that

the fiscal crisis might prompt the closure of some sub-
way  lines  and  service  reductions  on  others,  subway
service had badly lagged behind the record growth in
ridership  of  recent  years.  Many  lines  are  now  over-
crowded,  resulting  in  long  and  unpleasant  commutes
for numerous New Yorkers living outside of Manhat-
tan. In 2007, Howard H. Roberts Jr., president of New
York City Transit, provided a bleak assessment of the
system. “This is scary in the sense that right now, on a
lot of these lines, we’re several years and a big capital
construction  project  away  from  being  able  to  provide
what I consider adequate service,” said Roberts.

145

With

the subsequent collapse of the MTA’s revenue stream
from real estate properties, things are very likely to get
worse on the city ‘s subways and buses.

Mayor Bloomberg has noted the “challenges” of

transportation infrastructure as well. He observed in
a December 2006 speech that “Ridership has soared
making some commutes more of an ‘up close and per-
sonal’ experience than we’d like.” Bloomberg’s cam-
paign to impose a congestion charge on vehicles enter-

ing Midtown and Lower Manhattan, which ultimately
was  shot  down  by  the  New  York  State  Assembly  in
April  2008,  would  have  created  a  revenue  stream  to
fund  key  transit  initiatives.  But  the  mayor  has  done
little else in his eight years to make transit improve-
ments a priority, and he did not emphasize the posi-
tive implications for mass transit in his unsuccessful
effort to win approval for congestion pricing.

Similarly, New York City and its environs could

benefit from significant new investment in trade infra-
structure, perhaps including the proposed rail-freight
tunnel under the East River. New York’s emergence as
the nation’s premier trading post grew largely out of
major public investment, notably the Erie Canal, which
took advantage of its magnificent natural harbor. There
is a compelling argument that the disproportionate loss

of warehouse and other blue collar employment from
New York can be traced to a basic reluctance to build
significant new infrastructure, while cities such as
Charleston and Savannah have proven willing to do so.
These cities have also leveraged their strong ports to
expand industrial opportunities, often on land adjacent
to their harbor facilities.

146

We should not minimize the expense that these

infrastructure upgrades would require, nor the short-
term inconvenience they would cause for New York’s
already beleaguered residents and workers. It’s also
true that fixing roads, adding subway lines and build-
ing schools don’t garner headlines and campaign con-
tributions to the extent of stadium development and
business-friendly rezoning. Ultimately, though, a new
emphasis on the unglamorous basics might be the key
to saving middle class New York—both for the tangible
results, and by giving a sense that our leaders are en-
gaged not just on behalf of art stars and Wall Street’s
wizards, but the lower-profile engineers, carpenters,
computer technicians, nurses and graphic designers
who give the city its full character.

Investing in basic infrastructure improvements and improving the regulatory en-
vironment are the logical next steps in the city’s quest to make the city more
livable and ease some of the biggest causes of daily frustration for middle class
New Yorkers. Priorities should include increasing the frequency of service on
overburdened subway and bus lines outside of Manhattan.

New York City has enjoyed phenomenal success in many

areas over the past 15 years. But in one crucial respect—

the ability to retain and grow a middle class—the city

faces a crisis.

Those who would dismiss this problem as a byproduct of

the city’s good fortunes are missing the bigger picture: a

New York City inhospitable to middle class aspirations will

lose population, character and ultimately even its economic

pre-eminence. New York’s own history, as well as that of ur-

ban centers throughout the world, has proved that a strong

middle class offers tremendous social, political and eco-

nomic benefits. This is even truer today, as the “plutonom-

ic” economy built around Wall Street continues to shrink.

The city’s middle class may enjoy some short-term respite

as apartment rents and home prices continue to dip in the

months ahead. But this will hardly provide a lasting remedy

to the multitude of challenges facing New York’s middle

class described in this report--especially since the ongoing

economic crisis likely will magnify existing problems (too

few middle-income jobs created and inadequate transit

service, to name two) more than it creates opportunities.

Instead, what’s needed is a series of policies designed for

the long haul that help preserve and expand the city’s mid-

dle class. We suggest, in brief, the following steps:

Develop a comprehensive strategy to diversify the

economy and support the growth of middle-income

jobs.

City economic development officials should dramat-

ically increase the resources they put into nurturing en-

trepreneurs, artisans and freelancers; helping more small

home-grown firms get to the next level; and supporting

the growth of sectors that provide middle-income jobs—

from port-related warehousing to food manufacturing.

Stop neglecting the city’s community colleges.

City

and state officials must embrace community colleges as

engines of mobility and dedicate the resources necessary

to strengthen these institutions and ensure that a greater

number of middle class, poor and working poor New York-

ers can attend these schools and complete their degrees.

Pay attention to the basics.

City officials must priori-

tize efforts that enhance New York’s quality of life. This

means keeping crime rates low, continuing the efforts to

reform and improve city schools, and generally commit-

ting to preserve and ultimately improve quality city ser-

vices such as sanitation—even in a time of tight budgets

and economic upheaval.

Improve transit service, particularly in the boroughs

outside of Manhattan.

Instead of spending billions to

build glamorous new sports stadiums, train stations and

other large-scale development projects, city and state

officials should steer public resources toward increasing

the frequency and quality of subway, bus and ferry ser-

vice and upgrading deteriorating roads across the five

boroughs.

Increase the stock of housing that is affordable to

the middle class.

City and state officials should become

much more aggressive about preserving what’s left of

the city’s affordable housing while also addressing bar-

riers to building new middle class housing, including the

city’s sky-high building costs. They should also increase

the amount of city capital funds used for middle-income

housing.

Protect the character of city neighborhoods.

If New York

is to increase its stock of affordable housing, city of-

ficials must support at least moderately high density

residential development in parts of the outer boroughs

that have sufficient infrastructure to accommodate ad-

ditional residents. Yet, city planners need to show far

greater resolve to protect the city’s numerous low-rise

neighborhoods from teardowns, shoddy building and

developments that are out of scale and character with

the community, and ensure that projects do not go for-

ward in those neighborhoods unless and until adequate

sanitation, school facilities and other necessary sup-

ports are present.

Rethink efforts to increase revenue from fees and

fines.

Middle class New Yorkers bear the brunt of the

city’s recent efforts to significant increase collections

from parking tickets, sanitation fines and other regula-

tory efforts. City officials should scale back its overzeal-

ous enforcement efforts.

Address other escalating costs.

Policymakers could do

far more to help residents and businesses reduce their en-

ergy bills by expanding conservation efforts and improv-

ing incentives to make homes and buildings more energy

efficiency. They could also help lower the monthly bills

New Yorkers pay for telecommunications services—from

Internet to cell phones—by supporting policies that fos-

ter competition in the marketplace and eliminating some

of the numerous telecommunications taxes and fees.

Invest in workforce development efforts with career

ladders.

Local policymakers should invest in educational

and training initiatives that put New Yorkers on the track

to decent-paying jobs, including English as a Second Lan-

guage (ESOL) and career and technical education (CTE)

programs. These programs should fit into a pipeline from

the city’s public schools and nonprofit training providers

to local employers seeking to fill quality jobs.

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46.

ENDNOTES

Source: EIA Electric Sales, Revenue and Price 2006.

New York State Energy Research and Development Authority.

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ENDNOTES

Change 74 to

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Joanne Wasserman, “Home for sale--sign of the times,” New

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Harris Interactive, “NYC Movers Study,” August 2006.

Daniel Henninger, “The Golden Age of New York City Was…

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LaGuardia Community College ($3,142) and Queensborough

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Los Angeles Community College District, Fast Facts.

Testimony of Dr. Lenore Beaky, professor of English, LaGuar-

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Testimony of Iris Weinshall, CUNY’s vice chancellor for facili-

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A. Strauss-Wieder, Inc. and Michael L. Lahr, Center for Urban

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ENDNOTES